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PHILIP AGEE

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Inside Cover:

Excerpted from a page-one pre-publication review in the Washington Post
"Book World"

When Victor Marchetti's The CIA and the Cult of Intelligence was published
it contained intriguing blanks where material deemed too sensitive by the CIA
had been.

There are no blanks in Philip Agee's Inside the Company: CIA Diary. This
densely detailed expose names every CIA officer, every agent, every operation
that Agee encountered during 12 years with "The Company" in Ecuador,
Uruguay, Mexico and Washington.

Among CIA agents or [contacts] Agee lists high ranking political leaders of
several Latin American countries, U.S. and Latin American labor leaders, ranking
Community Party members, and scores of other politicians, high military and
police officials and journalists.

After a stint as an Air Force officer (for cover) and CIA training, Agee
arrived in Quito, Ecuador in late 1960. During the glory years of the Alliance for
Progress and the New Frontier, he fought the holy war against communism by
bribing politicians and journalists, forging documents, tapping telephones, and
reading other people's mail.

But it was a faraway event which seems to have disturbed him more. Lyndon
Johnson's invasion of the Dominican Republic in 1 965 was an overreaction Agee
couldn't accept. In 1968, he resigned with the conviction that he had become a
"servant of the capitalism I rejected" as a university student — "one of its secret
policemen."

Agee decided to write this reconstructed diary to tell everything he knew. He
spent four years writing the book in Europe, making research trips and dodging
the CIA. At one point he lived on money advanced by a woman he believes was
working for the CIA and trying to gain his confidence.

Until recently, former CIA Director Richard Helm's plea that "You've just got
to trust us. We are honorable men" was enough. With the revelations of domestic
spying, it no longer is.

In this book Agee has provided the most complete description yet of what the
CIA does abroad. In entry after numbing entry, U.S. foreign policy in Latin
America is pictured as a web of deceit, hypocrisy and corruption. Now that we

can no longer plead ignorance of the webs our spiders spin, will be continue to
tolerate CIA activities abroad? — Patrick Breslin © The Washington Post

Cover photograph by Dennis Rolfe shows a typewriter and bugged case
planted on the author presumably by the CIA.

Stonehill Publishing Company
Distributed by George Braziller, Inc.

Philip Agee, who was a CIA operations officer for twelve years, now lives in
England.

"More than an expose, a unique chronicle ... the most complete description
yet of what the CIA does abroad. In entry after numbing entry, U.S. foreign
policy is pictured as a web of deceit, hypocrisy and corruption." — The
Washington Post

"Unlike Victor Marchetti, who was so high in the CIA that many of his
notions of what goes on at the operations level are downright absurd, Philip Agee
was there. He has first-hand experience as a spy-handler ... as complete an
account of spy work as is likely to be published anywhere ... presented with
deadly accuracy."— Miles Copeland, former CIA agent, in The London Observer

"The workings of the world's most powerful secret police force— the CIA—
comes across as a frightening picture of corruption, pressure, assassination and
conspiracy."— Evening News (London)

Introduction

This is a story of the twelve-year career of a CIA secret operations officer
that ended in early 1969. It is an attempt to open another small window to the
kinds of secret activities that the US government undertakes through the CIA in
Third World countries in the name of US national security It includes the actual
people and organizations involved, placed within the political, economic and
social context in which the activities occurred. An attempt is also made to include
my personal interpretation of what I was doing, and to show the effect of this
work on my family life. My reasons for revealing these activities will be found in
the text. No one, of course, can remember in detail all the events of a twelve-year
period of his life. In order to write this book, I have spent most of the last four
years in intensive research to reinforce my own recollections.

The officers of a CIA station abroad work as a team, often in quite different
activities and with a considerable number of indigenous agents and collaborators.
I have tried to describe the overall team effort, not just my own role, because all
the station's efforts relate td the same goals.

The variety of operations that are undertaken simultaneously by a single
officer and by the station team made an ordinary narrative presentation
cumbersome. I have chosen a diary format (written, to be sure, in 1973 and 1974)
in order to show the progressive development of different activities and to
convey a sense of actuality. This method also has defects, requiring the reader to
follow many different strands from one entry in the diary to another, but I believe
it is the most effective method for showing what we did.

In order to ease the problem of remembering who all the characters are, I
have included a special appendix, Appendix 1, which has descriptions of
individuals and organizations involved or connected with the Agency or its
operations (see note to Appendix 1). The reader is directed to this appendix by
the use of a double dagger, J in the text. It will be noted that many agents' names
have been forgotten and that only cryptonyms (code names) can be given. Some
of the original cryptonyms have also been forgotten, and in these cases I have
composed new ones in order to refer to a real person by some name at least.
Appendix 2 gives an alphabetical listing of all abbreviations used and an asterisk
indicates those entries which appear in Appendix 1.

INSIDE THE COMPANY: CIA DIARY

Several of the operational activities that I describe could not be placed at the
exact date they really happened, for lack of research materials, but they are
placed as close as possible to the date they occurred with no loss or distortion of
meaning. Similarly, several events have been shifted a day or two so that they
could be included in diary entries just before or just after they actually occurred.
In these cases the changes make no difference.

When I joined the CIA I believed in the need for its existence. After twelve
years with the agency I finally understood how much suffering it was causing,
that millions of people all over the world had been killed or had had their lives
destroyed by the CIA and the institutions it supports. I couldn't sit by and do
nothing and so began work on this book.

Even after recent revelations about the CIA it is still difficult for people to
understand what a huge and sinister organization the CIA is. It is the biggest and
most powerful secret service that has ever existed. I don't know how big the KGB
is inside the Soviet Union, but its international operation is small compared with
the CIA's. The CIA has 16,500 employees and an annual budget of $750,000,000.
That does not include its mercenary armies or its commercial subsidiaries. Add
them all together, the agency employs or subsidizes hundreds of thousands of
people and spends billions every year. Its official budget is secret; it's concealed
in those of other Federal agencies. Nobody tells the Congress what the CIA
spends. By Jaw, the CIA is not accountable to Congress.

In the past 25 years, the CIA has been involved in plots to overthrow
governments in Iran, the Sudan, Syria, Guatemala, Ecuador, Guyana, Zaire and
Ghana. In Greece, the CIA participated in bringing in the repressive regime of the
colonels. In Chile, The Company spent millions to "destabilize" the Allende
government and set up the military junta, which has since massacred tens of
thousands of workers, students, liberals and leftists. In Indonesia in 1965, The
Company was behind an even bloodier coup, the one that got rid of Sukarno and
led to the slaughter of at least 500,000 and possibly 1,000,000 people. In the
Dominican Republic the CIA arranged the assassination of the dictator Rafael
Trujillo and later participated in the invasion that prevented the return to power
of the liberal ex-president Juan Bosch. In Cuba, The Company paid for and
directed the invasion that failed at the Bay of Pigs. Some time later the CIA was
involved in attempts to assassinate Fidel Castro. It is difficult to believe, or
comprehend, that the CIA could be involved in all these subversive activities all
over the world.

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INSIDE THE COMPANY: CIA DIARY

The life of a CIA operations officer can be exciting, romantic. You belong to
a special club: The Company. For most of my career with the CIA I felt that I was
doing something worthwhile. There is not much time to think about the results of
your actions and, if you try to do it well, the job of operations officer calls for
dedication to the point of obsession. But it's a schizophrenic sort of situation. You
have too many secrets, you can't relax with outsiders. Sometimes an operative
uses several identities at once. If somebody asks you a simple question, "What
did you do over the weekend?" your mind goes Click! Who does he think I am?
What would the guy he thinks I am be doing over the weekend? You get so used
to lying that after a while it's hard to remember what the truth is.

When I joined the CIA I signed the secrecy agreement. With this book,
articles, exposure on radio and television, I may have violated that agreement. I
believe it is worse to stay silent, that the agreement itself was immoral. My
experience with the CIA has mostly been with its overseas operations. I trust
investigations now going on in Washington into CIA activities will also expose
CIA internal involvement which is, I suspect, much greater than anybody outside
the CIA knows or the National Security Council realizes. I believe a lot of
sinister things will come out and that Americans may be in for some very severe
shocks.

In the New York Review of Books of 30 December 1971, Richard Helms, then
CIA Director, was quoted from a rare address to the National Press Club. In
justifying the CIA'S secret operations, he said: 'You've just got to trust us. We are
honourable men.' I ask that these words be remembered while reading this book,
together with the fact that CIA operations are undertaken on instructions from the
President himself and are approved in very detailed form on various levels within
the CIA, and often at the Under-Secretary level or higher, outside the Agency.
Finally, I ask that it be kept in mind that the kinds of operations I describe, which
occurred for the most part in Latin America, were typical of those undertaken in
countries of the Far East, Near East and Africa. I would also suggest that they are
continuing today.

Revelations during the past year of the CIA'S "destabilization" program
against the Allende government in Chile, its illegal domestic operations and its
complicity in political assassinations or assassination attempts have finally
precipitated a long-overdue debate. I hope this book will contribute to it.

London, May 1975

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INSIDE THE COMPANY:

CIA DIARY

Part One

South Bend, Indiana April 1956

Hundreds of companies come to the university to interview students for
possible employment. I hadn't signed up for any interviews but I've just had my
first, and probably only, job interview. To my surprise a man from the CIA came
out from Washington to see me about going into a secret junior executive training
programme. Virginia Pilgrim must have recommended me. I'd forgotten she
mentioned a programme like this when she stayed with us in Tampa last year —
said she would dearly love to see the son of her oldest friends come into the CIA.
Somehow I have the impression she is one of the highest-ranking women in the
CIA — worked on the Clark Task Force that investigated the CIA under the
Hoover Commission.

I told Gus, } the recruiter, that I had already been accepted for law study. He
was surprised. Virginia didn't know my plans. He said the JOT (Junior Officer
Trainee) Program consists of six to nine months, in some cases even a year, of
increasingly specialized training on the graduate school level. After the course
you begin CIA work on analysis, research, special studies and reports writing,
administration or secret operations. He said he couldn't say much about the
course or the work because it is all classified.

Gus asked me about my military service situation and when I told him I
would have to do it sooner or later he mentioned a possible combination. For
JOT'S who haven't done military service the CIA arranges for them to take a
special course in the Army or the Air Force, which is really controlled by the
CIA. It takes about a year to get an officer's commission and then you have to
serve a year on a military assignment. Then it's back to Washington for the JOT
training programme and finally assignment to a job at CIA headquarters in
Washington. According to his calculations it would take five or six years to be
assigned overseas if I wanted to go into secret operations. Too long to wait before
getting to the good part, I thought.

Gus knew a lot about me: student government, academic honours and the
rest. I said that what I liked best was being Chairman of the Washington's
Birthday Exercises in February when we gave the Patriotism Award to General
Curtis Lemay. I told Gus that the Exercises are the most important expression of
the 'country' part of the Notre Dame motto ('For God, Country, and Notre Dame
'). He said I should keep the CIA in mind if I changed my plans. I would consider

INSIDE THE COMPANY: CIA DIARY

the CIA if the military combination worked but Gus emphasized that they only
want people prepared for a career in the CIA. That leaves me out.

I suppose the CIA works closely with General Lemay and his Strategic Air
Command. This is the most important part of the speech he gave at the Exercises:

Our patriotism must be intelligent patriotism. It has to go deeper than blind
nationalism or shallow emotional patriotic fervour. We must continually study
and understand the shifting tides of our world environment. Out of this
understanding we must arrive at sound moral conclusions. And we must see to it
that these conclusions are reflected in our public policies .... If we maintain our
faith in God, our love of freedom, and superior global air power, I think we can
look to the future with confidence.

Tampa, Florida June 1956

It's a strange feeling being back in Florida for the summer with no plans to
return to the cold north in the fall. The miserable weather and the long distance
from home and all the other negative aspects of studying at Notre Dame seemed
to fade away during Commencement Week-end.

No more bed check or lights out at midnight. No more compulsory mass
attendance and evening curfew. No more Religious Bulletin to make you feel
guilty if you didn't attend a novena, benediction or rosary service. And no more
fear of expulsion for driving a car in South Bend. The end has come too, I hope,
to the loneliness and frustration of living in an all-male institution isolated from
female company.

What will it be like to live without the religion and discipline of the
university? It may have been hard but they were teaching us how to live the
virtuous life of a good Catholic. Even so, I still have this constant fear that after
all I might die by accident with a mortal sin on my soul. Eternity in hell is a
worry I can't seem to shake off. But the main thing is to keep on trying — not to
give up. After having to take all those courses on religion the only person to
blame, if I really don't make it, will be me. It is the discipline and religion that
makes Notre-Dame men different, and after four years of training I ought to be
able to do better.

Admiral Arleigh Burke, Chief of Naval Operations, discussed this in his
speech at the graduation ceremony. He really impressed me:

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INSIDE THE COMPANY: CIA DIARY

Notre-Dame symbolizes many virtues. It blends the virtues of religion and
patriotism — service to God, service to country. Notre-Dame stands for faith —
faith in self and faith in country .... Self discipline and determination and fighting
spirit are an integral part of the curriculum ... We are living in a great country
where there is equality of opportunity, where justice is a reality... We are a
generous nation.... We will never wage a war of aggression.... We are a strong
nation.... We have strong allies.... But greater than all this strength is the strength
of our moral principles.... Our nation is the symbol of freedom, of justice and
opportunity, regardless of flag or political beliefs .... Communism has been, and
still is, a prison for the millions who are denied the opportunity to learn
responsibility — who are compelled to let the few do the thinking for the many
who will do the labor .... Should we relax our efforts, either spiritual or physical,
we would find our ship without a rudder; we would find our strength not
sufficient to cope with the strong adverse winds which at some time will confront
us. It takes a man with strength and a stout heart to steer in a gale.

Admiral Burke writes a great speech — couldn't have been more accurate or
more inspiring. At Notre Dame we learned how one's responsibilities extend
beyond oneself to family, community and nation, and that respect for authority is
the virtue of a respectable citizen.

I will be driving a truck this summer to earn money for law school in the fall.

Tampa, Florida December 1956

Studying law at the University of Florida was a mistake. I didn't feel I
belonged — I wasn't comfortable — in the fraternity whirl and the' hail fellow'
routine. But I'm not an ascetic either. I suppose it was the lack of a sense of
purpose or maybe I couldn't adjust to secular learning after four years of Jesuits
and four at Notre Dame. At least I did realize it, and only stayed three months.

I checked with the draft board and they said I have about six months before
I'll be called up. It's a sad prospect, two years wasted as a private, washing dishes
and peeling potatoes. For a few months anyway I'll live with my parents in
Florida and try to save some money. A draftee only makes about eighty dollars a
month and that's hardly enough for booze and cigarettes.

The problem is what to do about the business. My father and grandfather are
just starting a big expansion and they're counting on me to take my place with
them. I know I'll make a lot of money but I can't get enthusiastic about it. Why

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INSIDE THE COMPANY: CIA DIARY

the reluctance to go into a family business? When I switched to philosophy
studies after a year of business administration at Notre Dame I thought I was
doing it for the sake of a higher form of education. Like so many others I could
learn to run a business once I got into it. Well now I'm in it and I feel the same as
when I rejected business administration for philosophy. I wish I could speak to
my father or grandfather about it but it would look as if I think I'm too good for
something they've dedicated their lives to.

No hasty decisions. I've got six months to work with them and then two years
in the Army.

Tampa, Florida February 1957

There has got to be a way to avoid two lost years in the Army. I've written to
the CIA, reminding them of my meeting with Gus, and asking to be reconsidered.
I've received application forms, returned them, advised Virginia Pilgrim by
telephone, and now have to wait. Virginia said her friends in the personnel
department would process my application as fast as possible because of the
problem of the draft but it looks as if I may be too late. She said the security
clearance takes about six months so the draft will probably win.

Gus said the JOT programme is strictly for people who want to make the
CIA a career and I've been wondering about this. No way to know until I learn
more about what CIA work is like, but I really am interested in politics and
international relations. And the more I live here the less enthusiastic I get for a
lifetime in the family business.

We'll see what kind of alternative the CIA can provide. It will mean three
years' military duty instead of two if they take me, but I'll be an officer — more
pay, better work (especially at the CIA), and time to decide.

Washington DC April 1957

I've been called to Washington for an interview with the JOT office which is
in Quarters Eye near the Potomac River. I waited in a reception room until a
secretary came for me, filled out a visitor's pass form giving name, address and
purpose of visit, and the receptionist added the hour and stamped in large letters
MUST BE ACCOMPANIED. Then she gave me a plastic clip-on badge which I

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INSIDE THE COMPANY: CIA DIARY

had to wear at all times. The secretary signed as responsible for me and I
followed her to the JOT office.

The man who interviewed me is named Jim Ferguson. J We spent about a
half-hour discussing Notre Dame, the family business and my interest in a career
in foreign affairs. I remembered the conversation with Gus and emphasized that
while I am interested in a CIA career I know so little about the Agency that my
reasons are necessarily restricted to an interest in foreign affairs. He said that
they had arranged a series of tests and interviews with officers in charge of the
JOT programme, including Dr Eccles, J the Program Director. If the testing and
interviews go well a complete security background investigation will be made:
which could take about six months. But in my case, with the problem of the draft,
they could ask for priority action and hope for the best.

The secretary gave me a piece of plain white paper with the building names,
offices and times I was to report for the testing - it would take three days in all.
She explained that at each building I would have to report to the receptionist,
who would call the office where I had the appointment for someone to come and
sign me in. She also reminded me to wear the visitor's badge at all times in the
buildings and to return it with the pink visitor's pass on leaving. I would use the
shuttle, an exclusive Agency bus, to get around the different buildings.

During that first visit to the JOT office, I immediately sensed the fraternal
identification among the CI A people. I suppose it was partly because they used a
special 'inside' language. No one spoke of 'CIA', 'Central Intelligence Agency', or
even 'The Agency'. Every reference to the Agency used the word 'company'.

My first appointment was at the North Building with the Medical Staff and
after that I alternated between those people and the office called ;Assessment and
Evaluation' in the Recreation and Services Building on Ohio Drive. Although it
seemed that the Medical Staff were looking for physical and mental health, and
that 'A and E' were looking for the special qualities needed in an intelligence
operative, there seemed to be little distinction between them. It was exhausting:
endless hours filling in answer sheets to vocational, aptitude and personality
tests. I've read of the elaborate testing procedures developed by the Office of
Strategic Services during World War II and now I see it's still going on. Stanford,
Minnesota, Strong, Wechsler, Guilford, Kudor, Rorschach — some tests are
administered and others just written. The worst was the interview with the
psychiatrist at the Medical Staff — he really bugged me.

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INSIDE THE COMPANY: CIA DIARY

I finally finished about noon on the afternoon of the third day, and I had a
couple of hours before I had to report back to the JOT office so I decided to do
some sightseeing. I grabbed a sandwich at a blind stand and then took the shuttle
to the Executive Office Building. (Those blind stands — sandwich bars operated
by blind people — are in practically every building. I guess it's a good thing for
the blind people to have that work, and the company can let them in the buildings
because they can't read secret papers. Everybody wins.)

Then out to the Washington Monument. Looking out from the top of the
Monument at the buildings where our national life is guided, where our integrity
in the face of grave external threat is defended, and where the plurality of
conflicting domestic interests finds harmony, I admitted to myself that
participation in government is my long-range goal. It won't matter if I live below
my parents' material level or even without fixed roots in a community. Working
in the Central Intelligence Agency, preferably overseas, with intimate knowledge
of the functioning and decisions of friendly and hostile governments will provide
a forever stimulating and exciting atmosphere as well as an intellectually
challenging occupation. I'll be a warrior against communist subversive erosion of
freedom and personal liberties around the world — a patriot dedicated to the
preservation of my country and our way of life.

I left the Monument through the circle of American flags and walked back to
Quarters Eye feeling more confident and self-possessed than at any time since
arriving. After the usual sign-in, pink slip, badge and escort procedure, I was
received again by Ferguson J who told me the first reports on the testing looked
pretty good. While waiting to see Dr Eccles, Ferguson said he would brief me on
the military programme they had in mind. First, however, he warned me that the
programme was classified and not to be discussed with anyone outside the
Agency. At his request I signed a statement acknowledging that what I learned
was information relating to national security and promising that I would not
reveal it.

Ferguson outlined the military programme. When the security clearance is
completed I will be called back to Washington where I will enlist in the Air
Force. After three months' basic training I will be assigned to the first available
class at Officer Candidate School — all at Lackland Air Force Base in San
Antonio, Texas. Following OCS I will be assigned to an Air Force base
somewhere in the US, and, with luck, my duties will be in air intelligence.
Ferguson explained that the company doesn't control assignments made by the

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INSIDE THE COMPANY: CIA DIARY

Air Force after completion of OCS, but more and more of the company military
trainees are getting intelligence assignments during the obligatory year of strictly
military duties. After a year at the Air Force base I will be transferred to an Air
Force unit in Washington that is actually a company cover unit, and my formal
company training will begin.

The secretary appeared and said Dr Eccles would see me. I still had to get
past him and I had primed myself for this meeting. Virginia had told me that Dr
Eccles's approval was necessary for acceptance. He turned out to be a bushy-
browed, bespectacled man of about sixty with an unavoidable authoritative glare.
He asked me why I wanted to be an intelligence officer and when I replied that
foreign affairs is one of my main interests he tried to make me uncomfortable. He
said that foreign policy is for diplomats; intelligence officers only collect
information and pass it to others for policymaking. He added that maybe I should
try the State Department. I said maybe I should but that I don't know enough
about the Agency yet to decide, adding that I'd like to come into the programme
to see. He then gave me a little lecture; they don't want men who will quit the
CIA as soon as they finish military service. They want only men who will be
career intelligence officers. After that he turned into a kind old grandfather and
said we'd see how the security clearance turned out. Heshook my hand and said
they'd like to have me. Made it! I'm in — but it seems too easy.

Back in Ferguson's office where he continued to describe the programme. At
no time will I be connected openly with the company, and I am to tell no one that
I am being considered by it for employment. Assuming the security investigation
is favourable, they will arrange for me to be hired as a civilian by the Department
of the Air Force, actually by an Air Force cover unit of the company, when I am
called back to Washington. A few weeks later I will enlist in the Air Force and be
sent to Lackland for basic training. While in the Air Force I will be treated just
like any other enlistee and no one will know of my company connection.
Keeping the secret will be part of my training — learning to live my cover. A
violation of cover could lead to dismissal from the programme. My assignments
afterwards will also be determined in part by how well I have concealed my
company affiliation. Back in Florida I must keep the plan secret, but notify
Ferguson if I receive any orders from the draft board.

I'm beginning to feel a kind of satisfaction in having a secret and of being on
the threshold of an exclusive club with a very select membership. I am going to
be my own kind of snob. Inside the Agency I'll be a real and honest person. To

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INSIDE THE COMPANY: CIA DIARY

everyone outside I'll have a secret lie about who and what I am. My secret life
has begun.

Washington DC July 1957

Salvation! The security clearance ended before the call-up came, and I drove
to Washington loaded with books, hi-fi, records and tennis gear. Georgetown is
the 'in' area where a CIA officer trainee feels most comfortable, so I've moved in
with some former Notre Dame classmates who are doing graduate study at
Georgetown University. We're living in a restored Federalist house on Cherry Hill
Lane, a narrow brick street between M Street and the Chesapeake and Ohio
Canal. I have that feeling of being just the right person in just the right place.
These friends don't know I'm going into the CIA so this will be my first real test
of living a cover.

At the JOT office Ferguson told me whom I am working for. My 'employer'
is the Department of the Air Force, Headquarters Command, Research and
Analysis Group, Boiling Air Force Base, Washington. He gave me the names of
my commander, an Air Force colonel, and of my immediate supervisor, a major,
both of whom are fictitious. I have to memorize all this so I can reel it off to
people I meet. My Boiling Air Force Base telephone number rings in the Agency
Central Cover Division where they have some male telephone operators who roll
dice each morning to see who will play the colonel and who will play the major.

I signed another secrecy agreement — the wording makes it permanent,
eternal and universal about everything I learn in the company - and Ferguson sent
me over to my first assignment at 1016 16th Street. I rushed over but discovered
nobody was expecting me. Finally I was called up to the fourth floor and
welcomed to the Personnel Pool. All we do is fold maps and have crossword
puzzle competitions.

The Personnel Pool is a holding area for all prospective employees who lack
the final nihil obstat for the security clearance — we're all waiting for the same
happy event: the polygraph or lie detector. We're about thirty people. Some of
them have been in the pool for over a month and they're the rumour-mongers. It
seems that the polygraph, or 'technical interview' as it's officially called, has been
a real trauma for some. We have been warned that nobody talks about the 'poly'
and that makes the rum ours all the more mysterious. It seems that the main part
of the apparatus crosses the breasts, which makes some of the girls nervous, and

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INSIDE THE COMPANY: CIA DIARY

the main questioning is on homosexual experience, which makes some of the
boys nervous. There are stories of nervous breakdowns, ambulances and even
suicide. There's no doubt, however, what's going to happen when you get advised
of an appointment at Building 13.

Washington DC July 1957

After two weeks of folding maps my turn finally came. How stupid to think I
could beat the machine! Yesterday I was 'polyed' and now I'm back at the
Personnel Pool but on a different floor and with people who've already taken the
test. We're kept away from those who haven't taken it so they won't know much
about it. The interrogators don't tell you right away about the results of the test —
they make you wait. Nothing but gloom here.

The shuttle doesn't stop at Building 1 3 so I had to ask the driver to leave me
as near as possible. When he acknowledged Building 13 in a loud voice (on
purpose, I'm sure) the cold, knowing eyes of the other passengers focused right
on me and I felt like a leper. They knew I was about to make a secret, intimate
confession. Bad joke.

At 23rd Street and Constitution Avenue, the driver announced Building 13
and pointed me towards a complex of temporary buildings, barracks style,
beyond a parking lot towards the Watergate. The buildings are surrounded by
high chain-link fences topped by several strands of barbed-wire tilting towards
the outside. All the windows, have the same type of chain-link mesh and every
third or fourth window has an air-conditioner. None of them are open and the
buildings look impenetrable.

I made my way along the fence and the first building I noticed after getting to
a gate was one with a discreet 13 near the entrance. After a short wait with the
receptionist I was greeted by a man about thirty-five — clean-cut, clean-shaved
and clear-eyed. He took me a short distance down a hallway, opened a door, and
we passed into a small room with acoustical tile covering the walls and ceiling.
There was a standard government leather easy chair that backed up to a desk-like
construction with a built-in apparatus of dials, graph paper and odd, narrow,
metal pens. In an effort to keep me from more than a swift glance at the machine,
he conducted me immediately to a sitting position in the easy chair. From behind
the desk he brought a straight chair and sat down in front of me.

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The interrogator announced that I had reached the final phase of the security
clearance procedure necessary for access to Top Secret material and, of course,
for employment with the company He assured me that all employees of the
company, even Mr. Dulles, submit to the polygraph — not just once when they're
hired, but periodically throughout their careers. Then he asked me to sign a
prepared statement acknowledging that I was submitting to the test of my own
volition and that I would hold no claim against any person or the company
afterwards no matter what the outcome. I eagerly signed this quit claim — in
advance — and also another secrecy agreement, pledging myself to speak to no
one of the questions or other details of the interview.

We then reviewed the questions, all of which were to be answered simply
'yes' or 'no'. Is my name Philip Burnett Franklin Agee? Was I born on 19 January
1935? Have I ever used any other name or identity? Have I filled out my job
application form honestly? Have I ever been a member of any of the subversive
organizations on the Attorney-General's list? Have I ever been a communist or
belonged to any communist organization? Have I ever been in a foreign country?
In a communist country? Have I known any officials of a foreign government?
Of a communist government? Have I ever known an intelligence officer of a
foreign country? Have I ever worked for a foreign government? For a foreign
intelligence service? For a communist intelligence service? Have I been asked by
anyone to obtain employment with the CIA? Have I told anyone outside the CIA
of my attempt to obtain employment? Have I ever engaged in homosexual
activities? Have I ever taken drugs? Have I taken tranquillizers today?

The pre-test interview lasted over an hour as the interrogator explored each
question in depth, noting all names, dates, places, and finally rephrasing the
question to include an 'other than' or 'except for' clause that would qualify the
question and still allow for a 'yes' or 'no' answer. During this discussion the
interrogator explained to me that the lie detector is used exclusively in the
company by the Office of Security which is responsible for protecting the
company against employment of security risks or against penetration by hostile
intelligence services. He also assured me that everything I said during the
interview is strictly confidential and will be restricted to my Office of Security
File which is available only to security officers of the same office. I didn't have
the courage to ask how many security officers that meant, but as I wondered I felt
a creeping discomfort that behind one of those thousands of holes in the
acoustical tiles there was a microphone secretly recording our conversation. I

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also began to wonder if I was having incipient symptoms of the paranoia that
some people say is the personality trait sine qua non of the effective intelligence
officer.

Now we were ready for the test. The polygraph consists of three apparatuses
which are attached to the body of the person being interrogated and which
connect by tubes or cords to the desk ensemble. Each apparatus measures
physiological changes, marked on moving graph paper by three pens. There are,
accordingly, a blood pressure cuff that can be attached either to the arm or leg, a
corrugated rubber tube about two inches in diameter that is placed snugly around
the chest and fastened in the back, and a hand-held device with electrodes that is
secured against the palm by springs that stretch across the back of the hand. The
cuff measures changes in pulse and blood pressure, the chest-tube measures
changes in breathing rhythm, and the hand instrument measures changes in
perspiration. I was hooked into the machine, told to look straight ahead at the
wall, to be very still, and to answer only 'yes' or 'no' to each question. The
interrogator was behind me at the desk ensemble facing the back of my head. He
asked the questions to my back and I answered to the wall in front.

During the pre-test interview I had given my interrogator several half-truths,
partly because I simply resisted his invasion of my life, and partly because I was
curious about the effectiveness of the machine. Foolish child! As the cuff inflated
I was conscious of increased pulse and my hands began to sweat profusely.
Anticipating the questions that I should react on, I started to count the holes in
the tiles in order to distract myself from the test. The interrogator passed very
slowly from one question to another, pausing between each question. I answered
'yes' or 'no' and at the end he slipped in an unannounced question: had I answered
all the questions truthfully? Dirty trick. I said 'yes' and after a few seconds the
cuff deflated.

I heard a shuffling of paper and he reviewed the chart as I remained still. He
told me I could move a little but that if I was not particularly uncomfortable he
would like me to remain seated and hooked up. Fine. He stayed behind the desk
behind my chair behind my back and started asking me what I was thinking about
when I answered the question on whether anyone had asked me to obtain
employment with the CIA. Nothing in particular. He insisted but I couldn't come
up with an answer other than that I was thinking that indeed no one had asked
me. Discussion. Then he asked me what I was thinking when I answered the
question about telling anyone outside the C (A of my attempt to obtain

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employment. Nothing in particular. Discussion. Then the question on homosexual
experience. Then drugs. As we passed from question to question he insisted with
increasing intensity that I try to remember what I was thinking when I answered
the question, emphasizing that my cooperation is essential for a successful
testing. Successful? I wondered if successful for him is the same as successful for
me. Obviously not. I would stick to my half-truths. They weren't lies anyway, and
besides I have heard that you can beat the machine if you stay consistent.

We started again. Up went the blood pressure cuff and out came the
questions. In went the 'yes's' and 'no's' and up and down went the faintly
scratching pens. I fiercely counted the holes in the tiles and was gaining in
confidence. Down went the cuff followed by more post-test discussion. This time
I was' having difficulty' on two more questions. I repeated and insisted that I was
being truthful and that when answering each question I had been thinking only of
the question and of its only possible truthful answer — which I gave.

The interrogator said we would go through the questions again and that I
hadn't done too well on the first two runs, adding that there is no way for me to
be hired without successfully passing the test. Was there anything I wanted to say
or clarify? No. I was being truthful and maybe something was wrong with the
machine. That hurt. His tone cooled, the cuff inflated and we did another test. At
the end he said I was obviously having trouble. With an air of finality he
unhooked me from the machine.

At that moment I got scared and feared I wouldn't be hired. As I was about to
confess he said he would leave me alone to think things over for five or ten
minutes. He closed a lid to the desk ensemble and left the room taking the charts
with him. I stood up and looked at my watch which I had been asked to remove
and place on the desk behind me. I had been at Building 13 for over two hours.
The interrogator was gone for at least twenty minutes. During that time I decided
to tell the full truth. Why risk losing the job out of silly pride or the illusion that I
could beat the machine? But as the door opened and my interrgator rejoined me I
suddenly became frightened of admitting deception. I decided not to change any
answer. Besides, in the Personnel Pool I had heard that some people who have
difficulty are called back for a second or third time for the polygraph. I would
have another day if I really failed this time.

We passed through the questions two more times. After both tests the
interrogator insisted that I was having trouble on the same questions and I
insisted that I was answering truthfully no matter what difficulty I was having. At

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last he said that would be all. I asked if I had passed and he answered sceptically
that he didn't know, that I would be advised after the Security Office had
reviewed my case and the charts. He was very pessimistic, and as I was leaving I
feared that they might not even call me back for another test. I was exhausted —
went home, had a couple of drinks and slept for twelve hours.

When I called Virginia in the morning and told her I thought I'd failed the
test, she said not to worry, that they always make people think they've failed. She
thinks it's to avoid disappointment and fewer problems with those who really
aren't going to be hired. Virginia's news is temporary relief, but the wait is
agonizing. No more arrogant jokes about the polygraph in the Pool now — and
nobody's reckless enough to discuss his interrogation with anyone else.
Everybody's just sitting.

Washington DC July 1957

I couldn't stand it any longer. After three days' waiting, I called Ferguson to
admit I was lying and to volunteer to take the test again. Before I could say
anything he said he had some good news and to come over to his office. The tone
of his voice gave infinite relief — I knew I had passed.

At the JOT office Ferguson told me he has started my processing for
enlistment in the Air Force but it will take three or four weeks. Meanwhile he
wants me to take a training course on international communism and, if there is
time, a course on the bureaucratic organization of the company. These aren't the
courses I'll be taking when I get back but they'll be useful, he thinks, even if
they're pretty elementary. He also had the secretary arrange to get me a badge — I
can come and go now without being signed in - and he made an appointment for
me with Colonel Baird, J the Director of Training.

I missed the meeting with Baird and after being chastised at the JOT office I
finally saw him in his office at T-3 (another of the Potomac Park temporaries). I
hadn't realized how important Colonel Baird is — he set up the JOT programme in
1950 under direct supervision of General Walter Bedell Smith who was then
Agency Director. With Princeton, Oxford, and the headmastership of a boys'
school behind him, Baird is considerably more formidable than his military rank.
He oozes firm leadership, old hand super-confidence and a Dunhill special blend
for special pipes. He's tall, greying, very tanned and very handsome — irresistible
to the ladies, I'm sure. He didn't say much — just to work hard at OCS.

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Ferguson and everyone else, since the polygraph, have greeted me with'
welcome aboard', as if these words are the official greeting for newcomers.
Maybe there are a lot of ex-Navy men in the CIA — or maybe these people like to
think they're on a ship because of the isolation imposed by cover and security.

Baltimore, Maryland August 1957

The two weeks studying communism and two weeks reading organizational
charts of the headquarters' bureaucracy leave me happy to leave Washington.

Yesterday morning Ferguson gave me my final briefing on joining the Air
Force. Arrangements had been made, he said, at the main Air Force recruiting
office in Washington for me to be taken into the Air Force on a normal five-year
enlistment, which was the standard procedure for all Air Force enlistees.
However, after basic training I will receive a special appointment by the
Secretary of the Air Force to the first OCS class. I would have to be prepared to
cover this appointment because we JOT'S are the only exceptions to the Air
Force regulation that five years' service is needed before an enlisted man can
even apply for OCS. Ferguson said I can refer to a little known (so little known,
in fact, that it doesn't exist) Air Force programme for college graduates if I am
pressed, but I can probably avoid giving explanations. He warned me, however,
not to tell anyone that I am going to OCS until the assignment is actually
announced to me at Lackland Air Force Base.

I signed another secrecy agreement and Ferguson said I'll have to take the
polygraph again when I get back in two years' time. Then I took the bus to the
recruiting office carrying only an overnight bag with some toilet articles and a
change of underwear and socks.

I told the paunchy, weather-beaten recruiting sergeant my name as pleasantly
as I could. He answered 'yeah' and when I noticed it was a question I wondered
whether to say' here I am' or T want to enlist'. I decided to say both, trying to
sound unrehearsed, and I added that I thought I was expected. The recruiting
sergeant understandably looked back as if he thought I thought the Air Force was
about to be saved.

He gave me some forms to fill in and asked if I wanted to go in thirty, sixty
or ninety days. I said cheerfully that I was ready to go right then, which made his
eyes narrow and his mouth screw up into that' another case' expression. He
motioned me over to a table across the room where I filled in the forms,

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wondering all the while whether the sergeant was really attached to the JOT
office and was testing my ability to maintain the cover story I returned the forms
which he looked over and then he disappeared into a back office.

After a few minutes he returned with another recruiting sergeant and both
expressed considerable scepticism. We spent the next half-hour discussing why a
philosophy graduate wanted to enlist for five years in the Air Force in order to
learn to be a radar mechanic. Finally I admitted that it was indeed kind of strange
and I accepted their invitation to think it over for a few days. I carried my little
bag of essentials out of the recruiting office wishing I could find somewhere to
hide.

From a telephone booth I called Ferguson to advise that apparently the Air
Force didn't want me — not that day anyway. He gulped and stammered for me to
call him back in two hours. I wondered what clown had missed his cue while at
the same time I dreaded facing the recruiting sergeant again. When I called back,
Ferguson told me to go back to the recruiting office, that everything was all right
now. When I pressed him for an explanation his voice turned cold and he warned
me not to discuss classified matters over the telephone. Back in the recruiting
office there was a new sergeant who' simply gave me a ticket for the bus to
Baltimore for the medical examination and swearing in.

At Fort Holabird they took me. Tonight I fly to San Antonio to begin two
years away from CIA headquarters — Ferguson said I must consider this time as
part of the JOT training, a time for 'maturing', I think he said.

San Antonio, Texas Christmas 1957

Tony and I had Christmas dinner at the dining-hall, the low point of a
miserable day. Next week, New Year's Eve to be exact, we report to OCS. We're
going to live it up meanwhile except neither of us has any money.

There are only three of us going into this class; Tony, who's from Princeton;
Bob, from Williams, and me. A couple of nights ago we met in a hotel downtown
with the six JOT'S who started OCS in the last class. They are going to be upper
classmen now — the course is three months lower and three months upper class —
which means they will be harassing us. That's normal and necessary for cover.

For the meeting we took security precautions as Ferguson instructed when he
came to see us in October. No one can take any chances by a show of prior
knowledge or special camaraderie between the triple Xer's. Those three X's

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which are in brackets after our names on all our documents, are the Air Force's
way of keeping track of CIA trainees.

The guys from the upper class told us not to be surprised if they put the heat
on us — they have to because of the resentment on the part of the others in the
class who had to work years to get into OCS. It seems these non-corns aren't
happy about our miniscule bunch (there are about 300 cadets altogether in OCS)
being specially privileged by entering straight from basic training. I suppose we'll
run into the same.

San Antonio, Texas June 1958

In a few days I'll be a Second Lieutenant unless the OCS Commandant
decides my insult was too much to take. A couple of weeks ago he called me in to
tell me I was going to be eligible for a regular commission instead of a reserve
commission. Only the top six OCS graduates get regular commissions and for an
aspiring career officer it's the end of the rainbow — you practically can't get
discharged. The Commandant also said it looked as if I might graduate first in the
class. I made a panic call to Ferguson and he told me to turn the regular
commission down. I told the Commandant who said it might not help our cover
situation (he's the only officer on the OCS staff who knows of our CIA
sponsorship), if the top graduate refuses a regular commission. I got the hint and
am holding back an academic paper which should drop me a notch or two. But
the Commandant took my refusal of the regular commission like a slap in the
face. Guess this hasn't come up before.

My orders after commissioning are for transfer to the Tactical Air Command.
It's too good to believe: assignment as intelligence officer to a fighter squadron at
a base just outside Los Angeles.

Victorville, California June 1959

My orders finally came for transfer back to Washington — to the company
bogus unit, I mean. It's been a marvellous year, driving up and down those
motorways to Mexico, San Francisco, Yosemite, Monterey. I finally got busy
training the pilots in targeting because we have the new F-104 and nuclear targets
in China. I've also done some training in evasion and escape because some of the
targets are one-way ditch missions. The only big mistake was volunteering for
the Survival School at Reno, Nevada because they sent me to the January course
and the week-long trek in the mountains was on snowshoes — pure misery.

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I've been seeing Janet, my girlfriend from college, almost every week-end
since last summer. I've told her about my work in the company and about my
hopes to be assigned abroad. We've talked a lot about marriage but we're not sure
what to do. She would like to stay in California, and I wonder if I should wait
until after the JOT course is over a year from now. I'll be leaving for Washington
in a couple of weeks and we'll see how we endure the separation.

Washington DC September 1959

It didn't take a long time for us to decide. Less than a month after I left
California we agreed we didn't want to wait any longer, so now we begin a life
together. We were married at Notre Dame as a kind of compromise because
Janet's family is Congregationalist and she felt a wedding in a Catholic Church in
her home town might raise difficulties. We took a small apartment in the building
complex where Vice-President Nixon and his wife first lived when they came to
Washington after his election to the House. We have furniture to buy, but family
and friends have been exceedingly generous and new gifts arrive every day. We
can save some money by shopping at the military commissaries because I'm still
on active duty.

My military cover unit is an Air Intelligence Service Squadron at Boiling Air
Force Base in Washington. My cover telephone number has changed but the
same two telephone operators are rolling the same dice to see who will be the
colonel and who the major.

Ferguson said I probably won't be discharged until June or July of next year,
which will coincide with the end of the JOT training programme.

All the JOT'S in the OCS class ahead of me, my class, and the one behind me
are united in the JOT programme. Even so, we make up only about fifteen of the
sixty-odd in the class - which includes only six women. The JOT classes, which
have just started, are held in the Recreation and Services Building, the same one
where I was tested by the Assessment and Evaluation staff two years ago. The 'A
and E' routines are even longer now than before and I'm going through all of
those monotonous tests again. The only thing we lack is a mammoth Potomac
Park football stadium for Saturday afternoon frenzy — the rest is the old college
routine once more.

The opening sessions in the training course were welcoming speeches by
Allen Dulles, Colonel Baird, and others who have been showering us with

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affection and praise for following them into this life of deliberate self-abnegation,
unknown sacrifice and silent courage as secret warriors in the battles of our time.
Very romantic. Each one of us in the class represents the one in a hundred, or one
in a thousand, of the total number of applicants for the JOT programme who were
finally accepted. The company leaders tell us we're entering the world's second
oldest profession (maybe even the first, but that can't be proved) and if there are
any uneasy consciences in the group they have been soothed by Biblical
quotations showing that no less a figure than God himself instituted spying. So
much for the moral question.

But our country had forgotten the lesson of Jericho. In 1929 Secretary of
State H. L. Stimson closed the code-breaking operation known as the Black
Chamber with the scolding that 'gentlemen don't read other people's mail'. Until
Pearl Harbor foreign intelligence in the United States was all but forgotten. Then
there were the heroics of the OSS during the war followed by the decision of
President and Congress alike not to risk another surprise attack by leaving early
warning to peace-time military neglect once again. So the civilian CIA was
established in 1947 to provide a centralized agency for processing all foreign
intelligence and for producing a national intelligence product blessed by
enlightenment from all possible sources.

After two years away with the Air Force these first sessions have been
stimulating and even exciting — almost like a raging thirst being finally quenched.
The JOT office has arranged evening language courses for anyone interested, and
Janet and I have a class in Spanish three nights a week. It's nice that the company
includes the wives as much as possible. Otherwise they would really be at a
distance, because everything we study and read, almost, is classified. We selected
Spanish only because that was my language at school, but there is a monetary
awards programme for maintenance and improvement of foreign languages and it
might be a way to earn a little extra. Things are working out just right.

Washington DC October 1959

We've just finished a month studying communism and Soviet foreign policy,
and soon we'll begin studying the government organization for national security,
where the Agency fits in, and the bureaucratic organization of headquarters. Each
of us has periodic sessions with one of the JOT counsellors to discuss possible
future assignments and where to continue training after Christmas. Almost

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everyone seems to want to go into secret operations, which will mean six months'
special training away from Washington at a place called 'the farm'. I told
Ferguson I wanted to go to 'the farm', but he was non-committal.

The lectures and readings in communism have been especially interesting.
The Office of Training stays away from philosophy — dialectical materialism
wasn't even mentioned — while concentrating on the Soviets. It's a practical
approach, of sorts, because what the CIA is up against, one way or another, is
Russian expansion directed by the Communist Party of the Soviet Union —
CPSU. The Leninist concept of the party, particularly its elitist and secretive
nature, and the CPSU's difficulties in reconciling pragmatism with ideology
(Russian domination of the minority nationalities, NEP, collectivization and
elimination of the kulaks, united front doctrine, the Molotov-Ribbentrop pact) are
seen as related to one goal: obtaining, retaining and expanding power.

Subservience of foreign communist parties to the CPSU is another theme
given considerable emphasis — it's hard to believe that the Soviets with a straight
face preach that the first obligation of every communist, no matter what
nationality, is to defend the Soviet Union. Institutions such as the Comintern and
Cominform served that purpose in their time, but the KGB is the principal organ.
Much importance, of course, is given to the Soviet security organizations, from
the Cheka down.

The writings of defectors from communism were the most interesting: Louis
Budenz, Howard Fast, The God that Failed, Kravchenko, Gouzenko, Petrov. But
the most devastating for the Soviets, because of his criticism of Leninist party
doctrine, is Milovan Djilas. The other day we split into small groups and
interviewed Peter Deriabin J — he's the highest-ranked KGB defector yet. It was
done through closed-circuit television so that he could not see us (to protect our
security) and he was disguised and spoke through an interpreter (to protect his
security because he is living in the Washington area).

The central theory is that communist attempts to set up dictatorships around
the world are really manifestations of Soviet expansion which in turn is
determined by the need to maintain CPSU power at home. Our country is the real
target, however, and the Soviets have said often enough that peace is impossible
until the US is defeated. Now we're going to study how the government, and the
CIA in particular, are set up to counter the Soviet threat.

Washington DC November 1959

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A theme that is continually repeated during these sessions is that the CIA
does not make policy. The Agency's job is to provide the intelligence or
information that is used by the President and other policymakers. It only executes
policy, and collects information to be used in policy decisions by people outside
the Agency. It doesn't make policy.

For several weeks we have been listening to lectures and reading documents
on the government machinery for national security. The basic document is the
National Security Act of 1947 which set up the National Security Council (NSC)
as the highest body concerned with national security. Chaired by the President,
the NSC is composed of the following statutory members: the Secretary of State,
the Secretary of Defense, the Director of the Office of Civil and Defense
Mobilization, and the Vice-President. Membership can be enlarged whenever the
President desires by ad hoc appointments such as the Attorney-General or the
Secretary of the Treasury. The Chairman of the Joint Chiefs of Staff (JCS) and
the Director of Central Intelligence (DCI) are NSC observers. [1]

The NSC has its own staff and offices in the Executive Office Building next
to the White House and, in addition, has three important subordinate groups
reporting to it: the NSC Planning Board, the Operations Coordination Board
(OCB), [2] and the Intelligence Advisory Committee (IAC). [3] The NSC
Planning Board works mostly on preparing materials for NSC meetings and on
following up the implementation of NSC decisions. The OCB is of very special
interest to the Agency because its function is to review and approve CIA action
operations (as opposed to collection of information) such as propaganda,
paramilitary operations and political warfare. The OCB is composed of the DCI,
the Under-Secretary of State, the Deputy Secretary of Defence and ad hoc
members at the Under-Secretary level.

The IAC is like a board of directors of the intelligence community, chaired
by the DCI and having as members the Deputy Director of Central Intelligence,
the intelligence chiefs of the Army, Navy, Air Force, Joint Chiefs of Staff, the
Chief of Intelligence and Research (I N R) of the Department of State and the
Director of the National Security Agency. Intelligence chiefs of the FBI and the
Atomic Energy Commission sit on the IAC when appropriate. The purpose of the
I A C is to assign intelligence tasks among the different services according, at
least in theory, to which service can best do the job. It is also designed to avoid
both overlaps and gaps in the national intelligence effort, and it has several

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subordinate interdepartmental groups such as the Board of National Estimates,
the National Intelligence Survey Committee and the Watch Committee, each of
which is chaired by a CIA officer.

As part of the NSC mechanism the National Security Act of . 1947
established the office of the DCI as the NSC's principal intelligence officer and
the Central Intelligence Agency as the organization that would effect the
centralizing of the national intelligence effort. The CIA has five statutory
functions:

1. To advise the NSC in matters concerning such intelligence activities of the
government departments and agencies as relate to national security.

2. To make recommendations to the NSC for the coordination of such
intelligence activities.

3. To correlate and evaluate intelligence relating to the national security, and
provide for the appropriate dissemination of such intelligence within the
government.

4. To perform, for the benefit of the existing intelligence agencies, such
additional services of common concern as the NSC determines can be more
efficiently accomplished centrally.

5. To perform such other functions and duties related to intelligence affecting
the national security as the NSC may from time to time direct.

It is this fifth function which occupies most of the CIA's time and money. It's
the dagger inside the cloak. Covert action, although it is not spelled out for us
this way, is a form of intervention somewhere between correct, polite diplomacy
and outright military invasion. Covert action is the real reason for the CIA's
existence, and it was born out of political and economic necessity.

The DCI is described as a man with two hats. First, he is the principal
intelligence advisor "to the President and the NSC, and secondly, he is the
Director of the Central Intelligence Agency. Formal commands are given by the
NSC to the DCI through Top Secret Documents called National Security Council

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Intelligence Directives (NSCID's — pronounced non-skids). The NSCID's are put
into effect by documents issued by the DCI to the concerned member of the
intelligence community, including the CIA, these documents being called
Director of Central Intelligence Directives (DCID's). Within the CIA the DCID's
are particularized in the thick and continually changing volumes of regulations
and other instructions. We have been studying, then, the very broadly worded
NSCID's, the more particularized DCID's, and the specific CIA regulations.
These are the documents that govern everything from foreign intelligence
collection operations through political, psychological and paramilitary operations
to communications and electronic intelligence efforts. Clearly, the documentation
and the bureaucratic structure demonstrate that what the Agency does is ordered
by the President and the NSC. The Agency neither makes decisions on policy nor
acts on its own account. It is an instrument of the President ... to use in any way
he pleases.

***

We have also examined the question of Congressional monitoring of
intelligence activities and of the Agency in particular. The problem resides in the
National Security Act of 1947 and also in its amendment, the Central Intelligence
Agency Act of 1949. These laws charged the DCI with protecting the 'sources
and methods' of the US intelligence effort and also exempted the DCI and the
Bureau of the Budget from reporting to Congress on the organization, function,
personnel and expenditures of the CIA — whose budget is hidden in the budgets
of other executive agencies. The DCI, in fact, can secretly spend whatever
portion of the CIA budget he determines necessary, with no other accounting than
his own signature. Such expenditures, free from review by Congress or the
General Accounting Office or, in theory, by anyone outside the executive branch,
are called 'unvouchered funds'. By passage of these laws Congress has sealed
itself off from CIA activities, although four small sub-committees are informed
periodically on important matters by the DCI. These are the Senate and House
sub-committees of the Armed Services and Appropriations Committees, and the
speeches of their principal spokesman, Senator Richard Russell, are required
reading for the JOT's.

There have been several times when CI A autonomy was threatened. The
Hoover Commission Task Force on Intelligence Activities headed by General

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Mark Clark recommended in 1955 that a Congressional Watchdog Committee be
established to oversee the CIA much as the Joint Congressional Committee on
Atomic Energy watches over the AEC. The Clark Committee, in fact, did not
believe the sub-committees of the Armed Services and Appropriations
Committees were able to exercise effectively the Congressional monitoring
function. However, the problem was corrected, according to the Agency position,
when President Eisenhower, early in 1956, established his own appointative
committee to oversee the Agency This is the President's Board of Consultants on
Foreign Intelligence Activities, [4] whose chairman is James R. Killian, President
of Massachusetts Institute of Technology. It can provide the kind of private
citizen' monitoring of the Agency that Congress didn't want. Moreover, our
speakers have pointed out, the more Congress gets into the act the greater the
danger of accidental revelation of secrets by indiscreet politicians. Established
relationships with intelligence services of other countries, like Great Britain,
might be complicated. The Congress was quite right at the beginning in giving up
control — so much for them, their job is to appropriate the money.

Washington DC December 1959

Studying the Agency bureaucratic structure has been fascinating but at the
same time exhausting — there's been no end to organizational charts and speeches
by representatives from everyone of the divisions, sub-divisions, offices and sub-
offices. Each of the speakers has a story of how his office broke an important
case by having just the right piece of information or person for the job.

Woven into the training programme since the first days in September are
constant reminders of the need for tight security. Capabilities and intentions 'of
the enemy must be discovered, whether in the Kremlin, in a Soviet nuclear
weapons factory, at a missile development site, or in the meeting-hall of an
obscure communist party in Africa. But of utmost importance, since knowledge
of the enemy is necessarily limited, is the protection of our intelligence. We don't
want the enemy to know what we know about him, for then he could take
measures to annul our advantage. So we have to protect our intelligence by
building a curtain of secrecy called' security'. Receptionists, guards, badges,
barred windows, combination safe-filing cabinets, polygraphs, background
investigations, punishments for security violations, compartmentation and the
'need-to-know' principle.

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Compartmentation is the separation of activities whereby a person or group
performing a particular task do not know what tasks other people are doing. The
gap between people doing different jobs is bridged by the need to know. If a
person working in intelligence has a definite need to know what others are doing
on a specific job, he will be given access. If not, he is expected to subdue normal
curiosity. The CIA is organized with built-in compartmentation designed to give
maximum protection to the secret information collected for the policymakers.

The CIA bureaucracy is fairly complicated. [5] At the top of the pyramid are
the executive offices composed of the Offices of the Director, the Deputy
Director, the Inspector-General, the General Counsel, the Comptroller and the
Cable Secretariat.

Below the executive offices are four deputy directorates, each responsible for
distinct activities and each named after the title of the deputy director who heads
it. They are the DDI, headed by the Deputy Director, Intelligence; the DDP,
headed by the Deputy Director, Plans; the DDS, headed by the Deputy Director,
Support; and the DDC, headed by the Deputy Director, Coordination. The DDC,
we were told, is a small office dealing with management problems, and we have
spent practically no time discussing it. The other three deputy directorates are the
bone and muscle of the Agency. (See pp. 3 19-20 for organizational changes in the
early 1960s.)

The DDI is the component that sets requirements, engages in some
collection, evaluates and collates intelligence, and produces the finished product.
[6] It consists of several different offices, each of which provides a coordinating
function for the entire intelligence community. They are the Office of Current
Intelligence (OCI), the Office of National Estimates (ONE), the Office of Basic
Intelligence (OBI), the Office of Scientific Intelligence (OSI), the Office of
Research and Reports (ORR), the Office of Central Reference (OCR), the Office
of Operations (00), the Foreign Broadcast Information Service (FBIS), the
National Photographic Interpretation Center (NPIC). We have been asked to
write examples of the different types of specialized report prepared by these
offices, and we have visited several of them. It is interesting to note that over 80
per cent of the information that goes into finished intelligence reports is from
overt sources such as scientific and technical journals, political speeches and
other public documents. The rest is obtained from secret agents or techniques,
and the difference, of course, is in the quality and sensitivity of the covertly
collected intelligence.

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The clandestine collection part of the CIA is the DDP which is also known as
the Clandestine Services (CS). It consists of a headquarters' organization with
field stations and bases in almost all foreign countries. Although we reviewed the
headquarters' organization of the DDP we were told that the details of how secret
operations are run will be given only during the later instruction. Only the JOT'S
who express a desire to serve in the DDP and who agree in writing to take an
assignment to any country will be given the advanced operational training at 'the
farm'. Those who want to work in some area of the Agency other than the DDP
will go on to specialized training in headquarters.

The bulk of the CS is divided into operating divisions and senior staffs. [7]
the operating divisions are in charge of geographical areas and certain specialized
services. The senior staffs are in charge of coordination and review of all
operational activities within the functional category of each — which are
reflections of basic CIA operational theory. There are three senior staffs: the
Foreign Intelligence (FI) staff; the Psychological Warfare and Paramilitary (PP)
staff; and the Counter-intelligence (CI) staff. The FI staff is concerned with
intelligence collection operations, the PP staff with action operations and the CI
staff with protection of FI and PP operations. The difference between collection
and action operations is that collection should leave no sign, whereas action
operations always have a visible effect. (See pp. 319-20 for organizational
changes in 1960s.)

A collection operation might be the running of an agent in the Soviet
Ministry of Defence who is reporting on military planning. An action operation
might be an anti- communist intellectual journal, supported by CIA money, passed
through a Russian emigre organization with headquarters in Paris. Collection
operations respond to the needs of the DDI, for producing finished intelligence —
which in turn depends on the needs of the NSC and other consumers such as the
military services and the Department of State. Action operations consist of the
control, guidance and support of individuals and organizations engaged in the
battle against communism throughout the world. They include labour unions,
youth and student organizations, public information media, professional societies
such as journalists and lawyers, businessmen's organizations, politicians and
political parties and governments. Action operations also include the training and
support of irregular military forces such as guerrillas in Tibet or montagnards in
Vietnam or saboteurs in Communist China. Protection operations consists
generally of CIA efforts to protect the Agency against hostile penetration and to

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penetrate intelligence services of other countries in order to discover what
operations those services are running against us.

The DDP area divisions are responsible for all activities of the CS within
designated areas. These divisions are for Western Europe (WE) (which includes
Canada), Eastern Europe (EE), Soviet Russia (SR), the Near East (NE), Africa
(AF), the Far East (FE) and the Western Hemisphere (WH). Each area division is
headed by a Division Chief and Deputy Chief whose offices include staffs
responsible for review of FI, PP and CI operations within the geographical area.

[8]

Within each division the geographical area is divided into branches which
may include one or more countries as well as functional specialities peculiar to
the division. The branches in turn are divided into country desks when more than
one country is included in the branch. Thus the Polish branch of EE Division
deals exclusively with matters on Poland while the Central American branch of
WH Division has separate desks for six different countries.

A division and branch of the Clandestine Services in headquarters are
responsible for supporting field stations and bases in the foreign countries within
its area, as well as for keeping the senior staffs and the DDP advised on all
matters related to those countries, informational as well as operational. A
headquarters' division will provide personnel for the stations and bases, arrange
training support by specialists and, most important, process the paper-work
required for all field operations. Every operation; every agent and every report
sent from the field to headquarters requires review and routing of documents.
Area divisions are responsible for seeing that this enormous flow of paper is
properly channelled to the appropriate offices of the CS for review, advice and
approval or disapproval. Intelligence reports, as opposed to operational reports
which deal with the mechanics of how information is obtained, also need
processing for spelling, grammatical usage and routing to interested components
of the CS, the DDI and the rest of the intelligence community. Processing of the
operational and intelligence reports from the field is the job of desk officers in
the area divisions.

The CS includes four divisions that serve the rest. The International
Organizations Division (10) supervises CIA relations with labour, youth, student,
professional and news media organizations throughout the world. Activities in
these fields are coordinated by 10 with the PP staff and with the area divisions
and branches concerned. Contact between the CIA and officials of those

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organizations might be handled by an officer of 10 or by a station officer where a
particular operational activity takes place.

The Technical Services Division (TSD) provides support to operations in all
area divisions through experts in listening devices, photography, lock-picking,
invisible writing, clandestine opening and closing of correspondence, disguise,
containers with hidden compartments, handwriting analysis, identification of
persons through saliva analysis from objects such as cigarette butts, and many
other technical services. Specialists are available for training agents as well as to
perform tasks themselves. Several TSD support bases exist in foreign countries
for regional support. The TSD also has a continuing research programme for
improving its capabilities and for developing protective measures against the
devices of foreign services, especially the KGB.

Division D is the CS unit that supports the National Security Agency in
cracking the codes of foreign governments. When it is necessary to mount
operations in the field against the communications of other countries, NSA turns
to its sister intelligence services, such as the military services, all of which have
sizable monitoring operations going against communist countries' military
communications. Or NSA could turn to Division D which coordinates CIA
collection support for NSA. Thus Division D provides expert knowledge for the
planning of operations to recruit code clerks or to install technical devices to
enable the decrypting of coded messages. Division D seems to be the most hush-
hush of the CS operating divisions, but, like 1 0 Division, its activities are always
coordinated with the geographical area divisions and with station chiefs abroad.

The Records Integration Division (RID) is to the Clandestine Services what
OCR is to the DDI. It is somewhat different, however, because of the different
needs of the DDR Clearly the Agency has spared no expense with the best
system for storage and retrieval that IBM can build. Numbering systems exist for
topics and sub-topics for every country for storing intelligence reports. They also
exist for all agents and the different phases of each operation. Millions of names
are indexed for easy electronic processing and retrieval and microfilm is
automated so that copies of documents can be obtained simply by pushing
buttons according to coding classifications — practically instant retrieval of one
document from among millions. As the central repository for all CS intelligence
and operational reports, RID serves the entire headquarters DDP organization and
the field stations as well.

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The DDS [9] is the support structure of the Agency, much of which serves
the DDR This is the deputy directorate that we belong to as JOT'S. The most
important offices of the DDS are Personnel, Security, Training, Finance,
Communications and Logistics. Each of these offices has an important function,
but most of us have been pushing hard for the special operations training and for
assignment to the DDP.

A few days ago a list was read of those who have been accepted for 'the
farm'. I was on the list — practically everyone was — and we had a special briefing
on what lies ahead. 'The farm' is officially known by the cryptonym ISOLATION
(cryptonyms are always written in capitals), and is a covert training site run by
the Office of Training under military cover. It is a few hours' drive from
Washington, and we will spend most of the next six months there. On Friday
evenings those who wish will be allowed to check out for the week-end. The
briefing officer said that there is daily Agency air service (military cover)
between Washington National' Airport and ISOLATION, but the flights are used
mostly by Agency personnel not assigned for long periods to the base. At the
briefer's suggestion we have divided into groups of four or five for car pools so
that as many wives as possible will be able to get around Washington during the
week. Apparently we won't need transportation at ISOLATION anyway.

We have been given a Washington telephone number and told that it is a
direct line to ISOLATION for families but only to be used for emergencies. The
briefing officer finally told us the name and location of the base, the best route
for driving and our instructions for reporting. He placed extreme emphasis on
protecting the cover for the base and the sensitivity of its identification. He said
that agents from all over the world are trained there and they are not supposed to
know where they are. We probably won't even see them. The name of the base is
so sensitive, in fact, that we were told not to tell any of the JOT classmates who
weren't taking the operations training, nor any other Agency employees, nor even
our wives. Nobody talks about ISOLATION, and in conversations and even
formal briefing sessions it's just 'the farm'.

We report to 'the farm' the first Monday after New Year's Day. I feel relaxed
now - the customary over-eagerness has disappeared. I've been 'accepted into the
work I want and only an utter catastrophe can wash me out. Six more months of
training, study, learning a profession. Then an assignment to a DDP headquarters
desk and in another year or two I'll be a secret overseas operative.

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Camp Peary, Virginia January 1960

The entrance to Camp Peary is an ordinary looking gatehouse manned by
military police about fifteen minutes out of Williamsburg on the road towards
Richmond. We showed our company badges to a guard and he instructed our car
pool driver which turns to take to get to the JOT area. Our first session was in an
amphitheatre called the 'pit' where we were welcomed by the ISOLATION Base
Chief — formerly a Chief of Station in Mexico City. Then we were briefed by the
Base Security Officer on the do's and don'ts of ISOLATION. At anyone time
there are a number of different training sessions being conducted here, some with
foreigners who are not even supposed to know that they are in the US. These are
called' black' trainees and are. restricted to areas away from the JOT site and
other' normal' activities. From time to time we will hear weapons firing and
explosions as well as aircraft movement.

We are to stay in the general area of the JOT site except when coming or
going from the base entrance, although we will have training sessions at sites all
over the base where we will be taken by bus. Wherever we go on the base we are
to take extreme caution with cigarette packages, beer cans or other objects that
might reveal the location of the base to 'black' trainees. We are to wear Army
fatigues at all times on the base.

We are discouraged, although not forbidden, from leaving the base at night,
but the Base Chief told us we will have night study and training sessions that will
leave little time for visits to Williamsburg. Since all of us pertain to bogus
Defense Department cover units in Washington, our cover story for ISOLATION
is that we are Defense Department employees temporarily assigned to Camp
Peary. The security officer gave us the name of an Army colonel and his
Pentagon telephone extension in the unlikely event of verification of our status at
Camp Peary becoming necessary. This Pentagon extension rings in the Camp
Peary administration building where a CIA. officer plays the part of the colonel.

The base is thickly wooded and surrounded by high, chain-link fences topped
by barbed-wire with conveniently placed signs warning: 'US Government
Reservation. No Trespassing.' The northern boundary of the base is the York
River and the base itself is divided internally into different tightly-controlled
areas including administration, which is towards the entrance, the JOT training
site, the staff housing area, the landing field, and distinct sites for training in
border crossing, sabotage, weapons, air and maritime operations, ambush,

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evasion and escape, and clandestine meetings. Deer are plentiful as the base was
once a wildlife refuge, and there are several ranges for hunting as well as a
couple of stocked lakes.

After the fatigues were issued we checked into the old wooden-frame
barracks that have double rooms rather than open bays. All the buildings, in fact,
are World War II-style frame buildings except the new brick gymnasium. There
are classroom buildings; the training office where instructors have their offices,
mess hall, officers' club, movie theatre, football fields and a softball diamond.
For leisure time we have the club and sports facilities and even a language lab
where we can work with tapes. ISOLATION won't be bad at all, and on Friday
nights we can drive back to Washington for the week-ends.

Each of us has been assigned an advisor from the teaching staff with whom
we will meet from time to time to discuss our strengths and weaknesses. Mine is
John Allen, J an 'old NE hand' who served in Cairo. The training course will be
divided along the usual lines of Foreign Intelligence (collection), Counter-
intelligence (protection) and Paramilitary and Psychological (action). We will
also spend considerable time, they said, studying the tools of the clandestine
operator, otherwise known as 'tradecraft'. Finally there will be many practical
exercises in and around ISOLATION as part of the war-games technique used to
create the training scenario.

As all clandestine operations take place within a political context, the first
consideration is the set of objective factors that create the 'operational
environment or climate'. These factors include the friendliness or hostility of the
host government, the level of sophistication of the host internal security services
and other intelligence services operating in the same area, the known and
presumed aims of these services, the effectiveness and sophistication of the local
communist and other revolutionary organizations, local language, dress and other
customs, and the general political atmosphere of repression or liberalism. These
are the objective conditions within which clandestine operations are undertaken,
and they determine the manner in which these are executed. Running an agent-
penetration of the Ministry of Defense in Baghdad obviously differs from
running the same type of penetration in Paris or Prague or Bogota. As the degree
of clandestinity can vary according to the tools and techniques employed —
operational security practices can be more extreme or less — the 'operational
environment' determines whether goals are realistic and how they are to be
achieved. It includes a continuing evaluation of enemy capabilities.

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Taking into account, then, the operational environment, each CIA station has
a charter or general operational guide called the Related Missions Directive
(RMD). This is the document that establishes priorities and objectives and is, in
effect, the DCI'S instructions to the Chief of Station. In any country where there
is an official Soviet presence, such as an embassy or trade mission, the first
priority for the RMD is almost always the penetration of the Soviet mission
through the recruitment of its personnel or by a technical device. Penetration
operations against Chinese and other communist governments follow in priority
as do intelligence collection efforts against indigenous revolutionary movements
and local governments, whether friendly or hostile. CI and PP operations are also
included in the RMD, and when a station requests headquarters' approval of new
operations or continuation of existing operations, reference is made to the
appropriate paragraphs of the RMD.

I suppose my problem will eventually disappear, but I find it all rather
complicated because in the CIA cryptonyms and pseudonyms are used in place of
true names. There are many standard ones and, when reading, one has constantly
to refer from the text with cryptonyms to the cryptonym lists which give a
number, and then look up the same number on a separate true name list. The
cryptonym and true name lists are never kept in the same safe. Cryptonyms
consist of two letters that determine a general category or place, followed by
letters that form a word with the first two, or by another word.

Thus the United States government is ODYOKE. The Department of State is
ODACID, the Department of Defense is ODEARL, the Navy is ODOATH, the
FBI is ODENVY. All government agencies have a cryptonym beginning with
OD. The CIA'S cryptonym is KUBAR K and all Agency components have
cryptonyms beginning with KU. The Clandestine Services is KUDOVE, the FI
staff (and FI operations generically) is KUTUBE, the CI staff (and CI operations)
is KUDESK, the PP staff (and PP operations) is KUCAGE. Every foreign
country and every agent and operation in that country has a cryptonym that
begins with the same two letters — AE for the Soviet Union, BE for Poland, DI
for Czechoslovakia, DM for Yugoslavia, SM for the United Kingdom, DN for
South Korea, etc .. AELADLE, AEJAMMER and AEBROOM are cryptonyms
for operations against the Soviets.

Cryptonyms are used to substitute for true names in order to protect the true
identities of persons and places mentioned in correspondence. They are only used
in documents of the Clandestine Services. The Records Integration Division

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assigns new cryptonyms whenever a new operation or agent is proposed, using
the first two letters that correspond to the particular country. In certain cases
agents and operations are given cryptonyms of which the first two letters refer to
operations that occur in several countries — particularly the international
organizations involving labour and students. In operational correspondence when
no cryptonym has yet been assigned for a particular person, the word
IDENTITY is substituted in the text and the true name is sent in separate
correspondence for reconciliation with the original document by the addressee.

All KUDOVE officers who engage in operations .are assigned a pseudonym
consisting of a first name, middle initial and last name which is used in the same
fashion as cryptonyms — in order to preserve the officer's true identity should
correspondence be lost or stolen. Pseudonyms are always written with the last
name in capital letters, e.g. Rodney J. PRINGLE.

All this seems confusing at first — it's really like learning a new language. But
it adds a certain spice to the work, like a special taste that helps develop
institutional identity — more and more of the inside group syndrome.

Camp Peary, Virginia February 1960

We still have plenty of snow on the ground and on Sunday nights when we
return from Washington the deer are so thick along the base roads that we almost
run into them. We've all gotten to know each other more since coming to
ISOLATION. Almost any type of person you want can be found in the class. We
have a physical training programme three or four times a week at the gym —
calesthenics, basketball, squash, volleyball, weights. We also have training at the
gym in defence, disarming, maiming, and even killing with bare hands — just how
and where to strike, as in karate and judo. Our instructor in these skills (at first
nobody believed his real name was Burt Courage) was formerly on Saipan in the
South Pacific, which is another secret base of the Office of Training.

It's hard work. There is a physical-conditioning program, plenty of practice in
the martial arts. How to disarm or cripple, if necessary kill an opponent. We have
classes in propaganda, infiltration-exfiltration, youth and student operations,
labor operations, targeting and penetration of enemy organizations. How to run
liaison projects with friendly intelligence services so as to give as little and get as
much information as possible. Anti-Soviet operations — that subject gets special
attention. We have classes in framing Russian officials, trying to get them to

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defect. The major subject, though, is how to run agents — single agents, networks
of agents.

In the classes we have been studying the different kinds of Foreign
Intelligence — FI, or KUTUBE — operations conducted by the Clandestine
Services. Although these operations are designed to discover the capabilities and
intentions of foreign powers, particularly enemy or unfriendly governments, vis-
a-vis the US, they are supposed to focus on secrets rather than on overt or public
information. In addition to discovering ordinary state secrets, the CS is
responsible for obtaining the most complete and accurate information possible on
the global manifestations of Soviet imperialism, that is, on local communist
parties and related political groups. The exceptions to the world-wide operating
charter of the CS is the agreement among the US, the United Kingdom, Australia,
Canada and New Zealand whereby each has formally promised to abstain from
secret operations of any kind within the territory of the others except with prior
approval of the host government. The governments of all other nations, their
internal political groups and their scientific, military and economic secrets are
fair game.

FI operations originate with the informational needs of US policymakers,
specified in the voluminous requirements lists prepared by the various sections of
the DDI that produce finished intelligence. These requirements are also reflected
in the station RMD. The station, incidentally, is the CI A office in the capital city
of a foreign country. Other major cities of the country may have CIA offices
subordinate to the station and called bases. In most countries the stations and
bases are in the political sections of the embassies or consulates, with some
officers assigned for cover purposes to other sections such as economic or
consular. In certain countries, however, such as Panama and Germany the CIA
stations are on US military installations with only the chief and a minimum of
other officers having diplomatic status. Most of the others are under cover as
civilian employees of the Department of Defense with assignment to the military
bases.

The station's task is to determine the different ways desired information can
be obtained and to propose to headquarters the method thought most appropriate.
This task is called 'targeting', and for every operation targeting receives its
written expression in a Field Project Outline which is prepared at the station and
includes all the operational details such as the purpose or desired outcome,
specific target, the agents to be involved, any technical devices needed, support

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needed from headquarters or other stations, security and cover considerations
with an assessment of the 'flap potential' meaning the possible scandal if the
operation is discovered, and costs. Most overseas CIA operations are described in
Field Project Outlines, which are forwarded to headquarters for suggestions and
approval or disapproval by all interested headquarters' sections of the CS.

Depending on the cost or sensitivity of an operation, the Project Outline is
approved on a lower or higher level in headquarters, from Division Chief to
Assistant DDP, to DDP, to DCI. Some operations require approval outside the
CIA, but these are usually PP (action) projects that are submitted to the
Operations Coordination Board of the National Security Council (the Under-
Secretary level).

Projects for intelligence collection operations are generally approved for
periods of one year and can be renewed. The request for Project Renewal is a
document almost identical to the Field Project Outline and it includes details of
the operation's progress over the past year such as productivity, costs, security
problems, new agents and justification for continuation. Operations that have
failed to meet expectations or that are compromised by a security flap or that
have simply dried up are cancelled through a 'Request for Project Termination'
forwarded from the station to headquarters. This document includes the details on
reasons for termination, disposal of agents and property, alternative sources,
security and cover considerations and support requirements from other stations or
from headquarters.

Correspondence among CIA stations, bases and headquarters is the lifeline of
Agency operations. There are two basic types: operational reporting and
intelligence reporting. In operational correspondence, matters discussed include
security problems, cover, finances, agent access to targets, levels of production
(but not the facts themselves), proposals for new recruitments or termination,
equipment requirements, agent motivation, and any other occurrences that affect
the operation. On every operation an Operational Progress Report is required by
headquarters every three months, but much more frequent correspondence is
usually necessary.

Intelligence reporting from overseas operations comes in the form of a Field
Information Report (FIR) which contains fads related usually to one subject but
possibly from several sources. The FIR relates the facts as obtained from the
sources although source or field comments may be added. FIR's are prepared in
the stations on special mats for printing which are forwarded to headquarters for

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reproduction and distribution. FIR's contain a heading that includes the name of
the country or countries concerned, the subject-matter of the report, a description
of the source (prepared to protect his identity), an evaluation of the source's
reliability and an evaluation of the accuracy of the contents of the report. The
body of the report follows with the clarifying comments or opinions of source,
station or headquarters at the end. In headquarters the FIR's are given CS
numbers for retrieval purposes, and copies are sent, for instance, to DDI sections,
the Departments of State and Defense, the FBI or the White House.

Both operational reports and intelligence reports may be sent to headquarters
or other stations and bases either via the diplomatic pouch or by cable or
wireless. Practically all stations and bases have radio transmitting and receiving
equipment although commercial telegraph service is frequently used.

How do we get the information that goes into the intelligence reports of FI
operations? Mostly through paid agents. On the highest level there is the
politician, scientist, economist or military leader who is actually creating the
events that the Agency would like to forecast. This kind of person, however,
because of his position of leadership, is the least likely to tell the CIA or the US
government his own country's official secrets. There are some, however, who can
be convinced that the interests of the US and their own country are so close, even
identical, that nothing is lost by providing the information wanted by the CIA. In
other cases what the high level official says or plans may be placed on paper to
which access may be obtained by a whole variety of secondary level officials,
functionaries or colleagues. People of this level may betray their leader's
confidence for a great variety of motives. Then there is the third level of
prospective agents who simply have physical access to a target area but not to
documents themselves. These people may be trained to place listening devices
where sensitive conversations are held or to open secure document storage
containers or to photograph documents. Finally there is a great variety of people
who can assist in operations but who have no direct access to the sources
themselves. These are the support agents who rent houses and apartments, buy
vehicles, serve as couriers, and perform countless additional necessary tasks.

There are, then, in addition to operations involving high-level, primary
sources, a category of extremely important secondary operations called 'support
operations'. Often targeting to primary sources is effected through support
operations. These operations involve the use of surveillance teams to follow
people in the streets, observations posts to watch the comings and goings from

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buildings, multiple forms of photography, interception of correspondence from
the mails, access to important statistics and identification files of police and other
security services, airline, rail and ship passenger and freight lists, devices for
listening, telephone tapping and telegraph records. These operations may very
well yield sensitive, high quality intelligence but more often they are used to
identify the people we really need to get at, who may be recruited as intelligence
collection agents. Support operations are also indispensable for knowledge of
target personalities in order to discover motives that might make them accept or
decline a recruitment approach: strengths, weaknesses, problems, ambitions,
failures, enmities, vulnerabilities.

Another type of FI operation that is very common throughout the free world
results from the working relationships between the CIA and the intelligence and
security services of foreign countries. Contacts with foreign services are known
as liaison operations and their purpose is to exchange information, mount joint
operations and penetrate foreign services. The general rule on exchange of
information is to give nothing unless necessary. But since foreign services
usually press for an exchange, and often in poor countries they collect very little
useful information on their own, the second rule is to preserve a net gain, or
favourable balance towards the CIA in the exchange. Regulations determine the
types of information that can be exchanged and the record-keeping required.

The 'third agency rule' is an important operating principle in liaison
operations. Information passed from one agency to a second agency cannot be
passed by the second agency to a third agency without prior approval of the first.
The purpose of the rule, obviously, is to preserve the security of operations and.
the secrecy of information as well as the secrecy of the existence of the liaison
relationship between the first two services. If, for example, the British equivalent
of the CIA, MI-6, passed to the CIA station in London a certain piece of
information, the CIA in turn could not pass that information to the Dutch
Intelligence Service even though the information might be of great interest to the
Dutch. In such a case the London station would either suggest that MI-6 pass the
information directly to the Dutch (which may already have happened) or
permission might be requested for the CIA itself to pass on the MI-6 information.
In the event of a first agency agreeing that a second agency may pass information
to a third, the first agency may not wish to be revealed to the third agency as the
source, so that adequate concealment of the true source will be arranged.
Sometimes it can get complicated.

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The most important liaison operation of the CIA is with MI-6, whose
cryptonym is SMOTH. It has been almost ten years since Burgess and Maclean
disappeared, and SMOTH has apparently tightened its loose, 'old boy', clubby
security practices. The inner club also includes the services of Canada, Australia
and New Zealand although the CIA receives relatively little from these. Liaison
with the Dutch is considered excellent because they facilitate support operations
against targets of mutual interest, as do the Italians who tap telephones and
intercept correspondence for the CIA station in Rome. The West German services
are considered to be thoroughly penetrated by the Soviets while liaison with the
French has become difficult and sensitive since the return of de Gaulle.

In theory no operations should be undertaken by CIA stations with liaison
services if the same operations can be mounted without the knowledge of the
local service (excluding the UK, Canada, Australia and New Zealand). Those
operations undertaken without the knowledge or cooperation of a liaison service,
are called 'unilateral', whereas bilateral operations are those mounted for the CIA
with the knowledge and support of local services. As we examine various liaison
relationships it becomes clear that the major FI results in Western Europe come
from local services, particularly with support operations such as travel control,
telephone tapping, physical surveillance, postal intercepts and communist party
penetration operations. However, in underdeveloped, less sophisticated countries,
local services usually lack the knowledge and technical capability to mount
effective intelligence operations. Thus the station in many cases can choose
whether to mount joint or bilateral operations, or to undertake the operations
without the knowledge of the local service. The decision is often based on the
local services' internal security but also on the CIA personnel available in a given
country; when this is limited, it can balance the scales in favour of bilateral
operations.

Finally, there is the matter of penetration of local services by the CI A. For
many reasons, not the least of which is protection of the CIA itself, operational
doctrine demands the continued effort to recruit controlled agents within liaison
services. These agents, or prospective agents, are usually spotted by CIA officers
assigned to work with the local service to exchange information, to train the local
service and to work on the operations mounted by the local service to support the
CIA. Thus a CIA station may have an information- exchange programme going
with a local service, a joint telephone-tapping operation with the local service
and an officer or two of the local service on the payroll as a penetration of the

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same service. Penetration of liaison services, however, is more properly a
counter-intelligence function.

FI operations, then, are those undertaken to obtain information on the
capabilities and intentions of foreign governments, especially enemy and
unfriendly governments. Ultimately the FI collection effort is aimed at recruiting
or placing an agent in the Kremlin with access to the decision-making process of
the Soviet Praesidium. From that dream situation, collection operations spread
out and down to practically all other governments and their political, scientific
and economic secrets, and from there to the most obscure communist or other
revolutionary grouping of the extreme left.

As we study the different types of FI operations we engage in practical
exercises, both here at ISOLATION and in cities near by such as Hampton,
Norfolk, Newport News and Richmond. My main FI case has been a series of
meetings with a leader of an opposition, nationalistic political party. I play the
role of the station case officer under diplomatic cover while one of my instructors
plays the foreign political leader. This is a developmental case and I have to work
carefully to convince him that the best interests of his country and of the United
States are so closely aligned that by helping me he will be helping his own
country and political party. One more meeting and I'm going to offer him money.

Camp Peary, Virginia March 1960

Counter-intelligence (CI or KUDESK) operations differ from foreign
intelligence collection because by definition they are defensive in nature,
designed to protect CIA operations from detection by the opposition. The
opposition in this sense is every intelligence and security service in the world,
from the KGB to the municipal police in Nairobi. Since many countries separate
their foreign intelligence service from their internal security service, much as the
FBI is separated from the CIA, CI operations are targeted against both the foreign
and the internal services.

The CIA counter-intelligence function begins with the Office of Security of
the DDS and its responsibility for physical and personnel security. By protecting
buildings from entry by unauthorized persons and documents from perusal, the
Office of Security serves to protect the overall CIA effort. Similarly, the lengthy
and costly background investigations, together with the polygraph (cryptonym:
LCFLUTTER) help to prevent the hiring of penetration agents. Continuing

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review of the security files of CIA personnel as well as periodic LCFLUTTER
examinations are designed to reduce the risk of continued employment in the
CIA of employees who might have been recruited by opposition services.

The use of cover and compartmentation also serves to protect secret
operations by concealing the true employer of Agency members so as to prevent
discovery, The same is true of organizations, buildings, apartments, vehicles,
aircraft, ships and financing methods. Cover protects operations by making them
appear to be something legitimate that in reality they are not. Compartmentation
reduces the chance that exposure of a single operation, for whatever reason, can
lead to the exposure of additional operations. A CIA officer or agent could gain
knowledge of what other officers or agents were doing only if it were necessary
for him to do so for his own work.

Whether to use or not to use a particular prospective agent is determined,
from the C I viewpoint, by the 'operational approval' process. It is an integral part
of every relationship between the CIA and foreign agents no matter what a given
agent's tasks might be. The operational approval process begins with the initial
spotting and assessment of a prospective agent and continues through field and
headquarters' file checks and background investigation to the operational
approval system established in the CI staff of the DDR

No person may be used in an operational capacity by a field station without
prior approval by the Operational Approval Branch of the Counter-intelligence
Staff of the DDP in headquarters (CI/OA). Requests for approval start from the
field stations and are outlined in a document known as 'the Personal Record
Questionnaire (PRQ) which is divided into two parts. The PRQ Part I contains
some seven pages of basic biographical data including full name, date and place
of birth, names of parents, names of family members, schools attended,
employment history, marital history, military service, present and past
citizenship, membership in political organizations, hobbies, any special
qualifications, and use of drugs or other vices. In itself the PRQ Part I reveals no
operational interest or plans. The PRQ Part II, which never carries the
prospective agent's true name or other identifying, data, is a document of similar
length with all the details of operational plans for the agent. It is reconciled with
the PRQ Part I by a numbering system and usually bears the cryptonym assigned
to the prospective agent. In the PRQ Part II the proposed task for the agent is
described, the means through which the information in PRQ Part I was obtained

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and verified is detailed, the cover used by the person who spotted and assessed
the agent is given, and all the operational risks and advantages are discussed.

The officers in CI/OArun a series of name checks in headquarters and, after
studying the case, give final approval or disapproval for the proposed use of the
prospective agent. Assuming no serious problems exist, CI/OA issues a
Provisional Operational Approval (POA) on the agent, effective for six months,
at the end of which an Operational Approval (OA) is issued, based on additional
investigation by the station and the CI staff.

Files are maintained on all agents and they always begin with the number
201 — followed by a number of five to eight digits. The 201 file contains all the
documents that pertain to a given agent and usually start with the PRQ and the
request for POA. But the 201 file is divided into two parts which are stored
separately for maximum security. One part contains true name documents while
the other part contains cryptonym documents and operational information.
Compromise of one part will not reveal both the true name and the operational
use of the agent.

In addition to the continuing station assessment and evaluation of agents
from a C I point of view (which is to protect the Agency from hostile penetration)
and continuing file review in headquarters, almost all agents are polygraphed
from time to time. We call this' fluttering', from the polygraph cryptonym
LCFLUTTER. Agents are' fluttered' by the same polygraph officers of the Office
of Security in headquarters who interview prospective Agency employees in
Building 13. They travel, usually, in teams of two on periodic visits to several
countries in the same geographical area, although special trips on the spur of the
moment can be arranged for serious cases.

The polygraph is usually sent to field stations through the State Department
diplomatic pouch, and is mounted snugly inside a suitcase, usually the two-suite
size, caramel colour made by the Samsonite company. These suitcases look
innocuous and facilitate carrying the polygraph in and out of embassies and the
places where agents are tested. Arrangements are made for agents to be 'fluttered'
in safe sites with interpreters as needed. The questions usually concentrate on
whom the agent has told about his relationship with the CIA and any contacts he
may have had with other intelligence services. The purpose of using the 'flutter'
on agents is to root out double agents, although other matters inevitably arise
such as honesty in reporting and in the use of money.

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Communist Party (CP) Penetration Operations

Communist party penetration operations are all those efforts made to
penetrate the communist and extreme leftist revolutionary movements around the
world. Their purpose is to collect information on the capabilities, plans, officers,
members, weaknesses, strengths and international connections of every
revolutionary organization outside the communist bloc. They are considered
primarily of a counter-intelligence nature because of the conspiratorial nature of
communism and the similarity between communists parties and hostile
intelligence services. The focal point of headquarters for specialized skill and
advice on CP operations is the International Communism Division of the
Counter-intelligence Staff (CI/ICD). Although intelligence operations involving
officials of communist-bloc countries may be included in the general definition
of CP operations, because most government officials of interest in communist
countries are also party members, these are more properly considered Soviet or
satellite operations rather than CP operations.

A CIA station's approach to penetration of a communist party or of any
revolutionary organization is determined by the operational environment and
particularly on the measure of repression exerted against the revolutionary left.
Another factor of major importance is the general economic and cultural level of
a given country which will reflect markedly on the sophistication and
vulnerability of the revolutionary groups. As a general rule, penetration of a
communist party is more difficult in the degree that local security forces compel
it to operate clandestinely. If a given party is completely forced underground, for
example, there is no obvious way of penetrating it. Similarly, recruitment is
easier to the degree that members of the party are forced to live in penury, and
this generally corresponds to the overall level of a country's economic
development. A communist in La Paz will be more likely to spy for money than a
communist in Paris.

A proper interpretation of the operational climate is therefore an essential
first step in any station's CP programme. Next comes the matter of studying all
the overt material available on the party. This can be very considerable in the
case of a large and open party such as those of Italy, and France, or very limited
in the case of a proscribed party that operates clandestinely, as in Paraguay. Such
a study is based on the party press, speeches by its leaders, its propaganda

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notices, activities of front organizations and its degree of adherence to the party
line that emanates from Moscow.

Penetration of communist parties and other local revolutionary, organizations
by agents are standard bread-and-butter operations of practically every CIA
station. These agents are members of the revolutionary organizations on which
they report through clandestine communications arrangements with the station.
They are recruited in several ways. The first type is known as the 'walk-in'. The
walk-in is a member of the party who, from need of money, ideological
disillusionment or other motive decides to offer his services to the US
government. He makes his initial contact either by walking into the US Embassy
or Consulate or by a more discreet path designed to protect him from discovery
and party wrath.

It is the duty of every Chief of Station to make sure that the Embassy
Security Officer (State Department) briefs the receptionists (usually local
employees) and the Marine Guards about the possibility that nervous people who
do not want to give their names may show up from time to time asking to speak
to someone in the embassy about 'politics' or the like. In such cases, a legitimate
State Department officer, usually in the political section, will be notified and will
hold a private, non-committal interview letting the walk-in do most of the
talking. In this way the station officers are protected. The interviewing officer
will advise an officer in the station and a decision will be made about the walk-
in's bona fides and the advisability of direct contact by a station CP officer. A file
check and background investigation is always made before risking an initial
contact with the walk-in, since every precaution must be taken to avoid
provocation.

If the walk-in looks favourable and contact is established a series of long
sessions follow in which the walk-in details his political activities and his reasons
for having contacted the US government. His capabilities and willingness for
future work as a spy against the party will be determined and sooner or later he
will be 'fluttered'. The clearance process for POA will ,be initiated and if all goes
well secret communications are established and a new Cp penetration operation
will be under way.

Another way of penetrating the CP is through the non-communist who is
recruited to join the party and work his way up from the bottom. This is a long-
haul approach and usually undertaken only as a last resort.

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Perhaps the most difficult is the recruitment of members of a revolutionary
organization who are in good standing. This type of operation depends on reports
from other CP penetration operations because extensive knowledge of the
prospective recruit is needed to determine vulnerabilities and possibilities for
success. CIA stations are continually engaged in trying to recruit in this manner
and files grow thicker until a decision is made to recruit or not to recruit.

The recruitment approach may be 'hot' or 'cold'. In the first case a station
agent, usually not a CP penetration agent, who knows or can get to know the
target, will make the proposition, sometimes after long periods of nurturing the
relationship and sometimes rather quickly. The cold approach may be made by a
CIA officer or agent, perhaps wearing a disguise or called in from a neighbouring
country or from headquarters. He may accost the target in the street or at the
target's home without prior personal acquaintance with him. This type of
approach known as the' cold pitch' can backfire when knowledge of the target's
vulnerabilities is defective, and a ready escape plan for the recruiting officer is
advisable.

In both the hot and the cold approaches, prior arrangements are made for
immediate debriefing at a safe site, or for secure communications afterwards
should the target decline at first but reconsider later. The cold approach may also
be undertaken, on a small or large scale, by sending letters or notices to possible
recruits advising them of interest in their political work and suggesting that they
share it with others. A serviceable but non-compromising address such as a post-
box in the US may be furnished as well as a separate identifying number for use
by each prospective recruit. If the target answers by number he will be contacted
by an officer under secure conditions.

Finally, there is the bugging of the homes or meeting-places of party officers.
Such operations can be mounted successfully only if considerable information is
available on people, places and the importance of meetings. These are not always
available, given the secrecy required of conspiratorial revolutionary activity. But
bugging yields excellent intelligence because it lacks the human factor that may
colour, exaggerate or otherwise distort the reports from agents.

A station's support operations may be used to assist in the CP programme.
Surveillance teams may discover secret meeting-places that may be bugged.
Postal interception may provide interesting party correspondence, both from the
national and the international mails. Observation posts may reveal participants in
clandestine meetings or serve as listening posts for audio devices. Telephone

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tapping can reveal voluminous information on party functionaries and the
routines of party leaders. Surreptitious entry may produce party records and
membership lists.

Aside from the penetration programme directed against revolutionary
organizations, CIA stations also direct the offensive weapons of psychological
and paramilitary operations against them. These include the placing of anti-
communist propaganda in the public media, the frame-up of party officials for
police arrest, the publishing of false propaganda attributed to the revolutionary
group in such a way that it will be difficult to deny and damaging as well, the
organizing of goon squads to beat up and intimidate party officials, using stink
bombs and other harassment devices to break up meetings, and the calling on
liaison services to take desired repressive action. But we shall study these types
of operation later. Next we are concerned with the CI aspects of liaison
operations.

Liaison Operations

From the standpoint of pure doctrine all liaison operations are considered
compromised, since even the existence of a liaison relationship implies the giving
of something by the CIA: at the very least the identity of a CIA officer. It is
always hoped that the virtues of liaison operations with other intelligence
services outweigh their defects, but the judgement is sometimes hard to make.
The two most basic principles of liaison operations from the counter-intelligence
point of view are: first, there is no such thing as a friendly intelligence service,
and, second, all liaison services are penetrated by the Soviets or by local
revolutionary groups. Thus any operations undertaken jointly by the CIA with a
liaison service are by definition compromised from the start. It is for this reason
that some CIA intelligence reports (FIR'S) include the NOFORN or NO
FOREIGN DISSEM indicators which restrict reports to US officials only. The
indicators are used so that foreign liaison services will not receive information
from sensitive sources in the course of normal exchange programmes.

Why get involved with other services? Basically, liaison operations are
conducted because they are useful. They extend a station's limited manpower
however shaky the extension may be. They give the CIA a foot in the door for
penetration of the liaison service. And they may also result in a local service
taking action, such as an arrest or raid, at station request.

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In non-communist countries it is the policy of the Agency to assist local
security services to improve their capabilities if, of course, these services want
the help and their government is not openly hostile to the US. By giving money,
training and equipment to local services like the police, the CIA is able to receive
information that might otherwise not be available because, for example, of the
shortage of station officers. Travel control, for instance, involves obtaining airline
and ship passenger lists from the companies or from local immigration services.
Often it is easier to obtain them from a liaison service than from five or ten
different companies. Telephone tapping is often possible only through a local
service, especially when many lines are to be monitored. Mails can be opened
much more easily by a local service than by the lengthy process of unilateral
agent recruitment in post offices. Above all, if flaps (scandals) occur, the local
service, not the CI A, will take the rap.

Usually a Chief of Station will handle the contact with the chief of a local
service. Some stations may have whole sections of liaison officers at the working
level both in operational planning and in information exchange. The general rule,
of course, is to expose the absolute minimum of station officers to a local service
and, if possible, only those officers engaged in liaison operations. Officers
engaged in unilateral operations, that is, operations undertaken without the
knowledge of the local government, should be protected against compromise
with the local service.

Some local services are so pitifully backward that they need overt US
government assistance. Thus the International Cooperation Administration (ICA)
[10] technical assistance missions in many countries include Public Safety
Missions made up of US technicians who work with police departments. They
seek to improve the local service's capability in communications, investigations,
administration and record keeping, public relations and crime prevention. The
Public Safety Missions are valuable to the CIA because they provide cover for
CIA officers who are sent to work full time with the intelligence services of the
police and other civilian services. Station officers under other cover may work
with military intelligence and, at times, officers undercover as businessmen,
tourists or retired people may be assigned to work with local services.

CIA assistance to local services through Public Safety Missions or other
forms of cover are not only designed to help improve the professional capability
of the local service. Operational targeting of the local service is guided by CIA
liaison officers so that the local service performs tasks that are lacking in the

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overall station operational programme. In other words local services are to be
used for the benefit of the CIA, and this includes keeping the local service away
from station unilateral operations.

The personal relations between CIA liaison officers and their colleagues in
local services are very important, because the CIA liaison officers are expected to
spot and assess officers in the local service for recruitment as penetration agents.
Liaison officers make money available to officers of the local service and it is
expected that the local colleague will pocket some of the money even though it is
supposed to be strictly for operations. The technique is to get the local police or
intelligence officer used to a little extra cash so that not only will he be dependent
on the station for equipment and professional guidance but also for personal
financing.

Security officers such as police are often among the poorest paid public
servants and they are rarely known to refuse a gift. Little by little an officer of a
local service is called upon to perform tasks not known to anyone else in his
service, particularly his superiors. Gradually he begins to report on his own
service and on politics within his own government. Eventually his first loyalty is
to the CIA. After all, that is where the money comes from. Penetration operations
against local services are often of very considerable importance because of the
place of security services in local political stability. Reporting from these agents
is sometimes invaluable during situations of possible coup d'etat.

Finally, CIA stations may undertake unilateral operations through officers of
liaison services who have been recruited as penetration agents. That is the final
goal. Recruited liaison officers may also report on efforts by their services to
uncover unilateral station operations. This, too, is a happy situation.

Soviet/Satellite Operations

Operations against the Soviets and the satellite governments are designed to
produce, in the long run, positive information as opposed to counter-intelligence.
But both types of information, FI and CI, are so intertwined that they are
practically inseparable in specific operations. The reason is that operations are
extremely difficult to mount inside the target countries because of the
effectiveness of the communist internal security services. Those that do originate
within the Soviet Union or the satellites are usually surprise offers of services
that have little to do with targeting, spotting, assessment and recruitment. Rather

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they are the result of inner processes hidden somewhere in the psyches of
communist officials which surface at an unpredictable moment of strain. In
effect, these people usually recruit themselves.

On the other hand, access to Soviet and East European officials outside the
communist bloc is relatively easy and an elaborate operational method for
attacking them has developed in the CIA over the years. The operations that
result from this are generally more of a CI than an FI type, that is, they reflect
more of the protective function than the collection of intelligence information,
although they are in no way lacking in aggressive character.

The first rule is that all the bordering property around a Soviet embassy
should be considered for purchase by station support agents. The most
appropriate and the most promising of these properties will be purchased and
kept available for use whenever needed. As Soviet embassies are often sizeable
plots of land with large mansions and surrounded by high walls, there may be as
many as seven or eight houses contiguous with the Soviet property. These houses
may be used as visual observation posts and for the setting up of technical
collection equipment. For example, when the Soviets are known or suspected to
be using electronic encrypting machines, radiations emanating from them may be
captured, enabling the message to be decrypted. Such an operation is undertaken
in support of the National Security Agency. But observation posts are more
routinely used for identifying, by associations, the KGB and GRU (military
intelligence) residences within the Soviet mission as well as the general pecking
order in the Soviet colony.

Wherever possible all the entrances to the Soviet compound as well as the
gardens within are placed under visual observation. Such coverage may
necessitate as many as three or four observation posts. Each OP is manned by
agents, often elderly couples, who maintain a log of the comings and goings of
every Soviet employee as well as those taking part in, and characteristics of, the
frequent garden conversations. Photography is frequently used to get up-to-date
photos of Soviet personnel as well as for less successful purposes as close-up
movies shot of garden conversations and passed to Russian lip-readers. The logs
from the observation posts are studied with the transcripts of telephone tapping,
which is standard operational practice against all Soviet and satellite missions
outside the bloc together with the transcriptions of bugging operations against
their installations, if bugging has been possible. From these studies the functional
duties within the Soviet colony are revealed and the daily routines of everyone

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become fundamental operating knowledge of the CIA Soviet and satellite
operations officers.

Coverage of Soviet and satellite officers begins, however, long before they
arrive in a foreign country. Almost always the first notice of a new arrival results
from the visa request made by the Soviet Foreign Ministry to the embassy of the
country concerned in Moscow. The visa may be granted by the embassy, which
will advise its own Foreign Ministry, or the request will be transmitted to the
Foreign Ministry for approval. These communications are often made in coded
diplomatic messages. The CIA station in the capital city where the Soviet is to be
posted receives the decrypted messages from the National Security Agency via
headquarters where file checks immediately start on the Soviet official in
question. Thus if the Soviet Foreign Ministry requests from the Indian Embassy
in Moscow, a diplomatic visa for Ivan Ivanovitch the CIA station in New Delhi
may receive its first indication of the assignment through the monitoring of
Indian government communications.

Before the Soviet arrives the station will have all the available information
on him and his family together with photographs if possible. The information
would have been collected and filed from coverage of the Soviet (or satellite)
officer on previous tours of duty abroad, from defector debriefmgs, from
communications intelligence and from other miscellaneous sources. When no
traces exist a new file is opened and the target's history with the CIA begins.

The final purpose of the operations is to recruit Soviet and satellite officials
as agents for spying and this can be done only by getting to know them. In this
work the 'access agent' is the station's most sensitive and effective means of
obtaining data on target officials. Access agents are people who, for a great
variety of reasons, can establish a personal relationship with a Soviet or satellite
officer and through whom the CIA can observe the officer as closely as possible.
The access agent can also guide conversations very carefully to selected topics so
as to discover weakening beliefs, character defects, personal problems and basic
likes and dislikes. Sometimes an access agent's role may change to that of double
agent if the Soviet attempts to recruit him, but double-agent operations are
discouraged except in special circumstances because there are too many
problems in the continual need to be certain that the agent has not been doubled
back against the CI A. An access agent may be anyone so long as the target
official can be kept interested: a host country Foreign Ministry official, a third

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country diplomat, someone who shares the same hobby, a man with an attractive
wife.

In most countries the foreign diplomats have a club with monthly luncheons,
dinners and excursions. State Department and CIA officers under State cover are
members of these clubs and can thereby develop personal relationships with
Soviet officials. The Ambassador's permission is necessary for a station to guide
a State Department officer in a personal relationship with a communist diplomat,
who is almost always an intelligence officer, and at times CIA officers
themselves develop personal relationships with communist officials. But such
relationships are usually not as productive as the personal relations developed by
access agents, with whom the target official may relax and let down his guard.

Soviet and satellite embassies usually employ a small number of local people
as gardeners, cleaners and occasionally as chauffeurs. These people are always
screened by the embassy for loyalty to communism, but sometimes they too can
be recruited by the CIA. They have very little physical access to embassy offices
so they usually cannot plant listening devices, but they can report interesting
information on superior-inferior relationships, gossip and back-biting, wives and
children and visitors to the embassies.

The bugging of Soviet and satellite official installations abroad is a very high
priority but possible only in rare circumstances such as when a defector can plant
a device after contact with the CIA but before disappearing. However, as the
Soviets, satellites and Chinese expand their diplomatic and commercial relations
around the world, they always need buildings. From the moment a preliminary
mission by a communist country is planned, the CIA station brings everything to
bear in order to discover the buildings selected and, during the period before
occupancy, every effort is made to install listening devices. Soviet and satellite
officials usually live in embassies, consulates or other official buildings with
their families or alone, but a few live in apartment buildings. Their apartments
are also bugged whenever there is reason to believe intelligence of value can be
obtained.

Almost all CIA stations have surveillance teams equipped with cameras,
vehicles and radio communications. Their primary targets are known Soviet and
satellite intelligence officers and efforts are made to discover through the
surveillance teams the operational habits, and, with luck, the clandestine contacts
of the communist officer.

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Soviet operations are closely controlled by the Soviet Russia (SR) Division
of the DDP in headquarters. They are the specialists and much operational
correspondence on Soviet operations bears the cryptonym REDWOOD,
indicating SR Division action and control. In certain cases, however, the
indicator may be REDCOAT which means action and control by the area division
concerned. SR Division also coordinates a number of other operations that have
world-wide significance.

The RED SOX programme of illegal infiltration of agents into the Soviet
Union and satellite countries had started during the early 1950s but failed
miserably. It is still conducted, however, when the need is great and when a
Russian emigre with suicidal tendencies can be found. The REDSKIN
programme of legal travellers, on the other hand, has been highly successful even
though several agents have been lost. This programme includes tourists,
businessmen, scientists, journalists and practically anyone who can obtain legal
entry into the Soviet Union or the satellites and who is willing to perform
operational tasks.

Then there is the REDCAP programme which is a machine-listing system of
all Soviet nationals who travel abroad: scientists, technicians, military advisors
and commercial officers as well as diplomats. Intelligence officers, of course, use
all of these types of cover. The ZOMBIE listings are also machine runs, listing all
non- Soviet/satellite nationals who travel to the bloc, and the ZODIAC machine
programme lists travel of citizens of satellite countries to the West. SR Division
activities are particularly intense at international scientific and technical
congresses, and prior notices are sent to stations around the world describing the
meetings and requesting station nominees to attend the meetings and establish
contact with Soviet or satellite colleagues.

Our instructors here, and the visiting lecturers from SR and EE Divisions,
freely admit that the communist intelligence services have discovered numerous
examples of all categories of operation against them. Thus they are aware of our
methods. Nevertheless; the leaders of the Soviet Russia Division keep driving
home the theme that the Soviets are the only nation on earth with the capability
and the avowed intention of destroying the United States of America. This alone
requires every possible effort to carry the attack to the enemy.

Practical exercises continue. We've been spending about one afternoon per
week in near-by towns practising surveillance and having 'agent meetings' with
instructors. My liaison case was to convince the officer of the sister service to

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accept money for personal expenses and to begin performing tasks for me
without the knowledge of his superiors. The communist party penetration
exercise was focused on building up the 'agent's morale' and encouraging him to
take a more active role in the party work he despises. The Soviet operation was a
series of developmental meetings with a 'third country' diplomat (in my case an
Indian) leading to his recruitment as an access agent to a KGB officer. I also had
a legal travel case in which I recruited a reluctant American scientist who was to
attend a scientific conference. Then we had a series of briefing and debriefing
sessions before and after his trip. His main task was to befriend a Soviet
colleague who we know has access to sensitive military information. Hopefully
they will meet at future conferences and eventually my agent will recruit the
Soviet scientist.

Camp Peary, Virginia April 1960

Psychological and paramilitary, known as PP or KUCAGE, operations differ
from those of FI or CI because they are action rather than collection activities.
Collection operations should be invisible so that the target will be unaware of
them. Action operations, on the other hand, always produce a visible effect. This,
however, should never be attributable to the CIA or to the US government, but
rather to some other person or organization. These operations, which received
their Congressional charter in the National Security Act of 1 947 under 'additional
services of common concern', are in some ways more sensitive than collection
operations. They are usually approved by the PP staff of the DDP, but when very
large amounts of money are required or especially sensitive methods are used
approval may be required of the OCB (Under- Secretary level), the NSC or the
President himself.

PP operations are, of course, risky because they nearly always mean
intervention in the affairs of another country with whom the US enjoys normal
diplomatic relations. If their true sponsorship were found out the diplomatic
consequences could be serious. This is in contrast to collection operations, for if
these are discovered foreign politicians are often prepared to turn a blind eye —
they are a traditional part of every nation's intelligence activity.

Thus the cardinal rule in planning all PP operations is 'plausible denial', only
possible if care has been taken in the first place to ensure that someone other than
the US government can be made to take the blame.

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PP programmes are to be found in almost every CIA station and emphasis on
the kinds of PP operations will depend very much on local conditions.
Psychological warfare includes propaganda (also known simply as 'media '),
work in youth and student organizations, work in labour organizations (trade
unions, etc.), work in professional and cultural groups and in political parties.
Paramilitary operations include infiltration into denied areas, sabotage, economic
warfare, personal harassment, air and maritime support, weaponry, training and
support for small armies.

Media Operations

The CIA'S role in the US propaganda programme is determined by the
official division of propaganda into three general categories: white, grey and
black. White propaganda is that which is openly acknowledged as coming from
the US government, e.g. from the US Information Agency (USIA); grey
propaganda is ostensibly attributed to people or organizations who do not
acknowledge the US government as the source of their material and who produce
the material as if it were their own; black propaganda is unattributed material, or
it is attributed to a non-existent source, or it is false material attributed to a real
source. The CIA is the only US government agency authorized to engage in black
propaganda operations, but it shares the responsibility for grey propaganda with
other agencies such as USIA. However, according to the 'Grey Law' of the
National Security Council contained in one of the NSCID'S, other agencies must
obtain prior CIA approval before engaging in grey propaganda.

The vehicles for grey and black propaganda may be unaware of their CIA or
US government sponsorship. This is partly so that it can be more effective and
partly to keep down the number of people who know what is going on and thus to
reduce the danger of exposing true sponsorship. Thus editorialists, politicians,
businessmen and others may produce propaganda, even for money, without
necessarily knowing who their masters in the case are. Some among them
obviously will and so, in agency terminology, there is a distinction between
'witting' and 'unwitting' agents.

In propaganda operations, as in all other PP activities, standard agency
security procedure forbids payment for services rendered to be made by a CIA
officer working under official cover (one posing as an official of the Department
of State, for instance). This is in order to maintain 'plausible denial' and to

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minimize the danger of embarrassment to the local embassy if anything is
discovered by the local government. However, payment is made by CIA officers
under non-official cover, e.g. posing as businessmen, students or as retired
people; such officers are said to be working under non-official cover.

Officers working under non-official cover may also handle most of the
contacts with the recruited agents in order to keep the officer under official cover
as protected as possible. Equally, meetings between the two kinds of officer will
be as secret as may be. The object of all this is to protect the embassy and
sometimes to make the propaganda agents believe that they are being paid by
private businesses.

Headquarters' propaganda experts have visited us in ISOLATION and have
displayed the mass of paper they issue as material for the guidance of propaganda
throughout the world. Some of it is concerned only with local issues, the rest
often has world-wide application. The result of the talks was to persuade most of
us that propaganda is not for us — there is simply too much paperwork. But
despite that, the most interesting part of propaganda was obviously the business
of orchestrating the treatment of events of importance among several countries.
Thus problems of communist influence in one country can be made to appear of
international concern in others under the rubric of 'a threat to one is a threat to
all'. For example, the CIA station in Caracas can cable information on a secret
communist plot in Venezuela to the Bogota station which can 'surface' through a
local propaganda agent with attribution to an unidentified Venezuelan
government official. The information can then be picked up from the Colombian
press and relayed to CIA stations in Quito, Lima, La Paz, Santiago and, perhaps,
Brazil. A few days later editorials begin to appear in the newspapers of these
places and pressure mounts on the Venezuelan government to take repressive
action against its communists.

There are obviously hosts of other uses to which propaganda, both black and
grey, can be put, using books, magazines, radio, television, wall-painting,
handbills, decals, religious sermons and political speeches as well as the daily
press. In countries where handbills or wall-painting are important media, stations
are expected to maintain clandestine printing and distribution facilities as well as
teams of agents who paint slogans on walls. Radio Free Europe J (RFE) and
Radio Liberty J are the best known grey-propaganda operations conducted by the
CIA against the Soviet bloc.

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Youth and Student Operations

At the close of World War II, the Communist Party of the Soviet Union
began a major propaganda and agitation programme through the formation of the
International Union of Students (IUS) and the World Federation of Democratic
Youth (WFDY), both of which brought together national affiliates within their
respective fields in as many countries as possible. These organizations promoted
CPSU objectives and policy under the guise of unified campaigns (anti-
colonialism, anti-nuclear weapons, pro-peace groups, etc.), in which they enlisted
the support of their local affiliates in capitalist countries as well as within the
communist bloc. During the late 1940s the US government, using the Agency for
its purpose, began to brand these fronts as stooges of the CPSU with the object of
discouraging non-communist participation. In addition to this the Agency
engaged in operations in many places designed to stop local groups affiliating
with the international bodies. By recruiting leaders of the local groups and by
infiltrating agents, the Agency tried to gain control of as many of them as
possible, so that even if such a group had already affiliated itself to either the IUS
or the WFDY, it could be persuaded or compelled to withdraw.

The Agency also began to form alternative youth and student organizations at
local and international level. The two international bodies constructed to rival
those sponsored by the Soviet Union were the Coordinating Secretariat of
National Unions of Students J (COSEC) [11] with headquarters in Leyden, and
the World Assembly of Youth J (WAY) situated in Brussels. Headquarters'
planning, guidance and operational functions in the CIA youth and student
operations are centralized in the International Organizations Division of the DDP.

Both COSEC and WAY, like the IUS and WFDY, promote travel, cultural
activities and welfare, but both also work as propaganda agencies for the CIA —
particularly in underdeveloped countries. They also have consultative status as
non-governmental institutions with United Nations agencies such as UNESCO
and they participate in the UN special agencies' programmes.

One very important function of the CIA youth and student operations is the
spotting, assessing and recruiting of student and youth leaders as long-term
agents, both in the FI and PP fields. The organizations sponsored or affected by
the Agency are obvious recruiting grounds for these and, indeed, for other CIA
operations. It is particularly the case in the underdeveloped world that both
COSEC and WAY programmes lead to the recruitment of young agents who can

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be relied on to continue CIA policies and remain under CIA control long after
they have moved up their political or professional ladders.

Apart from working through COSEC and WAY the Agency is also able to
mount specific operations through Catholic national and international student and
youth bodies (Pax Romana and the International Catholic Youth Federation) and
through the Christian democratic and non-communist socialist organizations as
well. In some countries, particularly those in which there are groups with strong
communist or radical leaderships, the Catholic or Christian Democratic student
and youth organizations are the main forces guided by the Agency.

Agents controlled through youth and student operations by a station in any
given country, including those in the US National Students Association J (NSA)
international programme run by headquarters, can also be used to influence
decisions at the international level, while agents at the international level can be
used for promoting other agents or policies within a national affiliate. Control,
then, is like an alternating current between the national and international levels.

Largely as a result of Agency operations, the WFDY headquarters was
expelled from France in 1951, moving to Budapest. The IUS headquarters, on the
other hand, was never allowed to move to the free world after its founding at
Prague in 1946. Moreover, the WFDY and IUS have been clearly identified with
the communist bloc, and their efforts to conduct conferences and seminars
outside the bloc have been attacked and weakened by WAY and COSEC. The
WFDY, for example, has been able to hold only one World Youth Festival outside
the bloc, in Vienna in 1959, and then it was effectively disrupted by CIA-
controlled youth and student organizations. The IUS has never held a congress in
the free world. More important still, both WAY and COSEC have developed
overwhelming leads in affiliate members outside the communist bloc.

Labour Operations

Agency labour operations came into being, like student and youth operations,
as a reaction against the continuation of pre-World War II CPSU policy and
expansion through the international united fronts. In 1945 with the support and
participation of the British Trade Unions Congres (TUC), the American Congress
of Industrial Organizations (CIO) and the Soviet Trade Unions Council, the
World Federation of Trade Unions (WFTU) was formed in Paris. Differences
within the WFTU between communist trade-union leaders, who were anxious to

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use the WFT U for anti-capitalist propaganda,, and free-world leaders who
insisted on keeping the WFTU focused on economic issues, finally came to a
head in 1949 over whether the WFTU should support the Marshall Plan. When
the communists, who included French, Italian and Latin American leaders as well
as the Soviets, refused to allow the WFTU to endorse the Marshall Plan, the TUC
and CIO withdrew, and later the same- year the International Confederation of
Free Trade Unions (ICFTU J) was founded as a noncommunist alternative to the
WFTU, with participation by the TUC, CIO, American Federation of Labor
(AFL) and other national centres. Agency operations were responsible in part for
the expulsion of the WFTU headquarters from Paris in 1951 when it moved to
the Soviet sector of Vienna. Later, in 1956, it was forced to move from Vienna to
Prague.

The ICFTU established regional organizations for Europe, the Far East,
Africa and the Western Hemisphere, which brought together the non-communist
national trade -union centres. Support and guidance by the Agency was, and still
is, exercised on the three levels: ICFTU, regional and national centres. At the
highest level, labor operations congenial to the Agency are supported through
George Meany, J President of the AFL, Jay Lovestone, J Foreign Affairs Chief of
the AFL and Irving Brown, J AFL representative in Europe — all of whom were
described to us as effective spokesmen for positions in accordance with the
Agency's needs. Direct Agency control is also exercised on the regional level.
Serafmo Romualdi, } AFL Latin American representative for example, directs the
Inter-American Regional Labor Organization (ORIT) } located in Mexico City.
On the national level, particularly in underdeveloped countries, CIA field stations
engage in operations to support and guide national labour centres. In
headquarters, support, guidance and control of all labour operations is centralized
in the labour branch of the International Organizations Division.

General policy on labour operations is similar to youth and student
operations. First, the WFTU and its regional and national affiliates are labelled as
stooges of Moscow. Second, local station operations are designed to weaken and
defeat communist or extreme-leftist dominated union structures and to establish
and support a non-communist structure. Third, the ICFTU and its regional
organizations are promoted, both from the top and from the bottom, by having
Agency-influenced or controlled unions and national centres affiliate.

A fourth CIA approach to labour operations is through the International Trade
Secretariats J (ITS), which represent the interests of workers in a particular

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industry as opposed to the national centres that unite workers of different
industries. Because the ITS system is more specialized, and often more effective,
it is at times more appropriate for Agency purposes than the ICFTU with its
regional and national structure. Control and guidance is exercised through
officers of a particular ITS who are called upon to assist labour operations
directed against the workers of a particular industry. Very often the CIA agents in
an ITS are the American labour leaders who represent the US affiliate of the ITS,
since the ITS would usually receive its principal support from the pertinent US
industrial union. Thus the American Federation of State, County and Municipal
Employees } serves as a channel for CIA operations in the Public Service
International, J which is the ITS for government employees headquartered in
London. And the Retail Clerks International Association, J which is the US union
of white-collar employees, gives access to the International Federation of
Clerical and Technical Employees, J which is the white-collar ITS. Similarly, the
Communications Workers of America } is used to control the Post, Telegraph and
Telephone Workers International J (PTTI) which is the ITS for communications
workers. In the case of the petroleum industry the Agency actually set up the ITS,
the International Federation of Petroleum and Chemical Workers J (IFPCW)
through the US union of petroleum workers, the Oil Workers International Union.
Particularly in underdeveloped countries, station labour operations may be given
cover as a local programme of an ITS. Within the Catholic trade -union
movement similar activity is possible, usually channelled through the
International Federation of Christian Trade Unions } (IFCTU). [12] And for
specialized training within the social-democratic movement, the Israeli Histadrut
J is used.

Labour operations are the source of considerable friction between the DDP
area divisions and the stations, on the one hand, and the International
Organizations Division (IOD) on the other. The problem is mainly jurisdiction
and coordination. The labour operations agents on the international and regional
level (ICFTU, OR1T, ITS, for example) are directed by officers of IOD either in
Washington or from a field station such as Paris, Brussels or Mexico City. If their
activities in a particular country, Colombia, for example, are not closely
coordinated with the Bogota station, they may oppose or otherwise interfere with
specific aims of the Bogota station's labour operations or other programmes.
Whenever IOD labour assets visit a given country, the Chief of Station who is
responsible for all CIA activities in his country, must be advised. Otherwise the

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IOD agent, lacking the guidance and control that would ensure that his activities
harmonize with the entire station operational programme, not just in the labour
field, may jeopardize other station goals. Continuing efforts are made to ensure
coordination between IOD activities in labour and the field stations concerned,
but this is also hampered at times by the narrow view and headstrong attitudes of
the agents themselves.

On the other hand, IOD agents can be enormously valuable in assisting a
local station's labour programme. Usually the agent has considerable prestige as a
result of his position on the international or regional level, and his favour is often
sought by indigenous labour leaders because of the travel and training grants and
invitations to conferences that the agent dispenses. He accordingly has ready
access to leaders in the local non-communist labour movement and he can
establish contact between the station and those local labour leaders of interest.
Such contact can be established through third parties, gradually, so that the IOD
agent is protected when a new operational relationship is eventually established.
Field stations may call on IOD support in order to obtain the adoption of a
particular policy or programme in a given country through the influence that an
IOD agent can bring to bear on a local situation, again without the local labour
leader, even if he is a station agent, knowing that the international or regional
official is responding to CIA guidance.

Measuring the effectiveness of labour operations against their multi-million-
dollar cost is difficult and controversial, and includes the denial-to-the-
communists factor as well as the value of indoctrination in pro-Western ideals
through seminars, conferences and educational programmes. In any case, free-
world affiliation with the WFTU has been considerably reduced, even though
several leading national confederations in non-communist countries still belong.

Operations against the World Peace Council

Agency operations against the World Peace Council (founded in Paris in
1949) are undertaken to neutralize the Council's propaganda campaigns against
the US and its allies, particularly with regard to military pacts. Although no rival
organization has been established, media operations are directed against WPC
activities in order to expose its true sponsorship as a propaganda front of the
CPSU. Some success can be claimed in the expulsion of WPC headquarters from
Paris to Prague in 1951 although it moved to Vienna in 1954. Efforts are also

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made to prevent the WPC from holding congresses and other meetings outside
the communist bloc through operations involving media, students, youth, labour
and especially political-action agents for denial of permissions and other
harassment.

Journalists

Founded in Copenhagen in 1946, the International Organization of
Journalists (IOJ) brought together writers from both communist and non-
communist countries. Although the original headquarters of the IOJ was in
London, the Second Congress was held in Prague in 1947 where it was decided
to move the IOJ headquarters. Following the leadership of the national
journalists' organizations of the United States, Great Britain and Belgium, most
non-communist membership had been withdrawn by 1 950, and its activities were
generally confined to Iron Curtain countries.

In addition to propaganda against the IOJ and operations to deny Western
capitals for IOJ meetings, the Agency promoted the founding of an alternative
international society of journalists for the free world. In 1952 the World Congress
of Journalists reestablished the International Federation of Journalists % (IFJ)
which had been founded originally in 1926, but had been disbanded in 1946
when the IOJ was formed.

Benefits to the Agency from the IFJ operation include the spotting and
operational development of potential propaganda agents. Moreover, local station
support to IFJ member organizations can be used to combat the local communist
and procommunist press and the efforts at penetration by the IOJ. especially in
underdeveloped countries.

Lawyers

In 1946 the International Association of Democratic Lawyers (IADL) was
founded in Paris with the participation of lawyers from some twenty-five
countries. Dominated from the beginning by pro-communist forces, especially
the French participants, the IADL soon lost most of its non-communist members
and in 1950 was expelled from France, moving its headquarters to Brussels
where it has remained. The IADL'S main function has been to serve as a

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propaganda mechanism for the CPSU post-war themes of peace and anti-
colonialism.

In 1952, an international legal conference was held in West Berlin from
which a permanent committee emerged to carryon the work of exposing
communist injustice in East Germany. In 1955 this committee became the
International Commission of Jurists (ICJ) with headquarters in The Hague,
moving to Geneva in 1959. The ICJ is composed of twenty-five prominent
lawyers from countries around the world, and its main work consists of
investigating and reporting on abuses of the 'rule of law', wherever they occur.

The Agency saw the ICJ as an organization which it hoped would produce
prestigious propaganda of the kind wanted on such issues as violations of human
rights in the communist bloc. Reports on other areas like South Africa would, so
far as the CIA was concerned, merely lend respectability to this object.

Political-Action Operations

Communist expansion brought forth still another type of PP operation:
political action. Operations designed to promote the adoption by a foreign
government of a particular policy vis-a-vis communism are termed political-
action operations. While the context of these operations is the assessment of the
danger of communist or other leftist influence in a given country, the operations
undertaken to suppress the danger are pegged to specific circumstances. These
operations often involve promotion through funding and guidance of the careers
of foreign politicians through whom desired government policy and action can be
obtained. Conversely, these operations often include actions designed to
neutralize the politicians who promote undesirable local government policy
regarding communism.

Although political-action operations after World War II began with electoral
funding of anti-communist political parties in France and Italy in the late 1940s,
they are now prevalent in the underdeveloped countries where economic and
social conditions create a favourable climate for communist advance. The
obvious human elements in political-action operations are political parties,
politicians and military leaders, although agents in other PP operations including
labour, student and youth, and' media are often brought to bear on specific
political-action targets.

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In order to obtain political intelligence as well as to develop relationships
with potential political-action agents, most stations have continuing programmes
for cultivating local politicians from opposition as well as from government
parties. Making acquaintances in local politics is not usually difficult because
CIA officers under diplomatic cover in embassies have natural access to their
targets through cocktail parties, receptions, clubs and other mechanisms that
bring them together with people of interest. Regular State Department Foreign
Service Officers and Ambassadors as well may also facilitate the expansion of
station political contacts through arranging introductions. When a local political
contact is assessed favourably for station' goals, security clearance and
operational approval is obtained from headquarters, and the station officer in
contact with the target begins to provide financial support for political campaigns
or for the promotion of the target's political group or party. Hopefully, almost
surely, the target will use some of the money for personal expenses thereby
developing a dependency on the station as a source of income. Eventually, if all
goes well, the local politician will report confidential information on his own
party and on his government, if he has a government post, and he will respond to
reasonable station direction regarding the communist question.

A station's liaison operations with local security services are also a valuable
source of political-action assets. Because of frequent political instability in
underdeveloped countries, the politicians in charge of the civilian and military
security forces are in key positions for action as well as for information, and they
are often drawn into an operational relationship with the station when they enter
office merely by allowing ongoing liaison operations to continue. They are
subjected to constant assessment by the station for use in political action and
when deemed appropriate they may be called upon for specific tasks. Financial
support is also available for furthering their political careers and for a continuing
relationship once they leave the ministry.

As final arbiters of political conflicts in so many countries, military leaders
are major targets for recruitment. They are contacted by station officers in a
variety of ways, sometimes simply through straightforward introduction by US
military attaches or the personnel of US Military Assistance Missions.
Sometimes the liaison developed between the Agency and local intelligence
services can be used for making these contacts. Again CIA officers can make
contact with those military officers of other countries who come to the US for
training. As in the case of politicians, most Agency stations have a continual

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programme for the development of local military leaders, both for the collection
of intelligence and for possible use in political action.

The political actions actually undertaken by the Agency are almost as varied
as politics itself. High on the list of priorities is the framing of Soviet officials in
diplomatic or commercial missions in order to provoke their expulsion.
Politicians working for the Agency are expected to take an active part in working
for expulsion of 'undesirables'. Similarly, where the Soviet Union tries to extend
its diplomatic or commercial activities, our politicians are expected to use their
influence to oppose such moves. They are also expected to take a hard line
against their own nationals engaged in left-wing or communist activities. In the
last of these instances success means the proscription of the parties, the arrest or
exile of their leaders, the closure of their offices, publications and bookstores, the
prohibition of their demonstrations, etc. Such large-scale programmes call for
action both by anticommunist movements and by national governments — where
possible the Agency likes to use the same political-action agents for both
purposes.

But it is not just a matter of financing and guiding local politicians. In
situations regarded as dangerous to the US, the Agency will conduct national
election operations through the medium of an entire political party. It will finance
candidates who are both 'witting' and 'unwitting'. Such multi-million-dollar
operations may begin a year or more before an election is due and will include
massive propaganda and public -relations campaigns, the building of numerous
front organizations and funding mechanisms (often resident US businessmen),
regular polls of voters, the formation of goon-squads' to intimidate the
opposition, and the staging of provocations and the circulation of rumours
designed to discredit undesirable candidates. Funds are also available for buying
votes and vote counters as well.

If a situation can be more effectively retrieved for US interests by
unconstitutional methods or by coup d'etat, that too may be attempted. Although
the Agency usually plays the anti-communist card in order to foster a coup, gold
bars and sacks of currency are often equally effective. In some cases a timely
bombing by a station agent, followed by mass demonstrations and finally by
intervention by military leaders in the name of the restoration of order and
national unity, is a useful course. Agency political operations were largely
responsible for coups after this pattern in Iran in 1953 and in the Sudan in 1958.

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Paramilitary Operations

At times the political situation in a given country cannot be retrieved fast or
effectively enough through other types of PP operations such as political action.
In these cases the Agency engages in operations on a higher level of conflict
which may include military operations — although these should not be seen as
US-sponsored. These unconventional warfare operations are called paramilitary
operations. The Agency has the charter from the National Security Council for
US government unconventional warfare although the military services also
sustain a paramilitary capability in case of general war. These operations seem to
hold a special fascination, calling to mind ass heroism, resistance, guerrilla
warfare, secret parachute jumps behind the lines. Camp Peary is a major Agency
training base for paramilitary operations.

The need for getting agents into denied areas like certain parts of the Soviet
Union, China and other communist countries, is satisfied in part by illegal
infiltration by land, sea or air. The agents, usually natives of the denied area, are
given proper clothing, documentation and cover stories and, if infiltrating by
land, may be required to pass secretly through heavily guarded borders. Training
in border crossing is given in a restricted area of Camp Peary where a mile or so
of simulated communist borders is operated with fences, watch-towers, dogs,
alarms and patrols. Maritime infiltration involves the use of a mother ship,
usually a freighter operated by an Agency cover shipping company which
approaches to within a few miles of the shore landing-site. An intermediate craft,
often a souped-up outboard, leaves the mother ship and approaches to perhaps a
mile off the shore where a rubber boat with a small silent outboard is inflated to
carry the infiltration team to the beach. The rubber boat and auxiliary equipment
is buried near the beach for use later in escape while the intermediate craft
returns to the mother ship. Infiltration by air requires black overflights for which
the Agency has unmarked long- and short-range aircraft including the versatile
Helio Courier that can be used in infil-exfil operations with landings as well as
parachute drops. Restricted areas of Camp Peary along the York River are used
for maritime training and other parts of the base serve as landing-sites and drop
zones.

Once safely infiltrated to a denied area, a lone agent or a team may be
required to perform a variety of jobs. Frequently an infiltration team's mission is
the caching of weapons, communications equipment or sabotage materials for

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later retrieval by a different team which will use them. Or, an infiltration team
may perform sabotage through the placing of incendiary devices or explosives at
a target-site timed to go off days, weeks or even months later. Sabotage weapons
include oil and gasoline contaminates for stopping vehicles, contaminates for
jamming printing- presses, limpets for sinking ships, explosive and incendiary
compounds that can be moulded and painted to look like bread, lamps, dolls or
stones. The sabotage instructors, or 'burn and blow boys', have staged impressive
demonstrations of their capabilities, some of which are ingeniously designed so
as to leave little trace of a cause. Aside from sabotage, an infiltration team may
be assigned targets to photograph or the loading or unloading of dead drops
(concealed places for hiding film, documents or small containers). Escape may
be by the same route as entry or by an entirely different method.

The Economic Warfare Section of the PP staff is a sub-section under
Paramilitary Operations because its mission includes the sabotage of key
economic activities in a target country and the denial of critical imports, e.g.
petroleum. Contamination of an export agricultural product or associated material
(such as sacks destined for the export of Cuban sugar), or fouling the bearings of
tractors, trucks or buses destined for a target country may be undertaken if other
efforts to impede undesired trade fail. As Economic Warfare is undertaken in
order to aggravate economic conditions in a target country, these operations
include in addition to sabotage, the use of propaganda, labour, youth, student and
other mass organizations under CIA control to restrict trade by a friendly country
of items needed in the target economy. US companies can also be called upon to
restrict supply of selected products voluntarily, but local station political-action
assets are usually more effective for this purpose.

Also coordinated in the Paramilitary section of the PP staff is the effort to
maintain Agency supplies of weapons used in support of irregular military forces.
Although the Air and Maritime Support section of the staff supervises standing
Agency operations to supply insurgents (Air America and Civil Air Transport in
the Far East, for example) additional resources such as aircraft can be obtained
from the Defense Department. These operations included the Guatemalan
invasion in 1954 (aptly given the cryptonym LCSUCCESS); Tibetan resistance
against the Chinese in 1958-9 and the rebellion against the Sukarno government
in Indonesia in 1957-8; current training and support of irregular forces in South
Vietnam and Laos; and increasing sabotage and paramilitary operations against
the Castro government in Cuba. Leaflet drops as part of the propaganda aspect of

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paramilitary operations are also arranged through the Air and Maritime Support
section.

Closely related to paramilitary operations are the disruptive activities known
as militant action. Through organization and support of 'goon squads' sometimes
composed of off-duty policemen, for example, or the militant sections of friendly
political parties, stations attempt to intimidate communists and other extreme
leftists by breaking up their meetings and demonstrations. The Technical Services
staff of the DDP makes a variety of weapons and devices for these purposes.
Horrible smelling liquids in small glass vials can be hurled into meeting halls. A
fine clear powder can be sprinkled in a meeting-place becoming invisible after
settling but having the effect of tear-gas when stirred up by the later movement of
people. An incendiary powder can be moulded around prepared tablets and when
ignited the combination produces ample quantities of smoke that attacks the eyes
and respiratory system much more strongly than ordinary tear-gas. A tasteless
substance can be introduced to food that causes exaggerated body colour. And a
few small drops of a clear liquid stimulates the target to relaxed, uninhibited talk.
Invisible itching powder can be placed on steering wheels or toilet seats, and a
slight smear of invisible ointment causes a serious burn to skin on contact.
Chemically processed tobacco can be added to cigarettes and cigars to produce
respiratory ailments.

Our training in PP operations includes constant emphasis on the desirability
of obtaining reportable intelligence information from agents engaged in what are
essentially action (as opposed to collection) operations. A well-run action
operation, in fact, can produce intelligence of extremely good quality whether the
agents are student, labour or political leaders. Justification for continuing PP
operations in Project Renewals includes references to the operation's value in
strictly collection activities as well as effectiveness in achieving action goals. No
action agent, therefore, can be allowed to neglect the intelligence by-product of
his operation, although the action agent may have to be eased into the
intelligence reporting function because of the collaborative nature of his early
relationship with the Agency. Nevertheless with a little skill even leaders of some
rank can be manipulated into collecting information by letting them know
indirectly that financial support for them is based partly on satisfaction of
intelligence reporting requirements.

The funding of psychological and paramilitary projects is a complex
business. Project Outlines (see p. 50) are prepared either in the station or at

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headquarters, depending on which of these is proposing or running the operation.
Included in this, apart from those elements already mentioned for FI projects,
will be a statement on the need for coordination with other US government
agencies such as the State Department or the Department of Defense. Where
appropriate further reports are attached giving greater detail on finances,
personnel, training, supply and cover mechanisms.

Operational progress reports are required each trimester in the case of routine
operations, but such reports may be more frequent in special cases. Intelligence
received as a result of p p operations is processed in the same way as that which
comes from FI operations.

Funding action operations, especially those involving labour, student, youth
or other organizations is a perpetual problem. Under certain circumstances it can
be done through foundations of one sort or another which have been created as
fronts for the Agency, but before this, or any other, method can be employed
there first has to be a decision about the level at which the funds should be
passed. If money is to be put into an international organization like WAY, for
example, then it might be possible to do this through an American organization
affiliated to it. The money can then be disguised as a donation from that
organization. In other circumstances it might be possible to supply the money
through a 'cutout', that is, through a person who can claim that the money is
either a donation on his own account or from his business. If this system is used
the money is sometimes paid by the 'cutout' to a US organization affiliated to the
international group for whom the money is finally intended.

If it is paid direct then it is usual for the secretary-general or the finance
committee chairman of the organization in question to be a 'witting' agent. The
decision about the method to be used is subject to several considerations. First
the matter of security and cover is considered; second comes the question of
which method would best ensure that the recipient or recipients will then do what
they have been paid for. Thus funds become a very effective method of guiding
an action agent. When cover foundations or companies are used for funding they
may be chartered in the US or in countries such as Lichtenstein, the Bahamas and
Panama, where commercial secrecy is protected and governmental controls are
minimal.

Camp Peary, Virginia May 1960

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The practical exercises are more pleasant now that spring has arrived. Except
that we pick up hordes of ticks during the paramilitary training. We have had
training in evasion and escape and border crossing — also night exercises in
maritime infiltrations and air drops. At the ranges we have firing sessions with a
variety of pistols, rifles and sub-machine-guns. In July, after the regular JOT
training course ends, there will be a three-month specialized course in
paramilitary operations. Ten or fifteen of the class have volunteered for the
course and afterwards they'll be assigned to operations already underway against
Vietnam, Laos and Cuba.

The instructor who was my nationalistic political leader in the FI exercise
became a wild man in the political-action case. He went around without my
knowledge trying to recruit colleagues to overthrow the government and telling
them he was working for me in the US Embassy. The word got back to the
Ambassador (another instructor) and I had to convince him not to send me home.
Then I paid the agent a generous termination bonus and picked up with one of his
party subordinates.

Still, we have had a serious upheaval in the JOT class. None of us is quite
sure whether this is a training exercise or real or partly both. The training staff
has been ranting and raving, both in individual sessions with advisors and in the
classroom and pit sessions, that we aren't taking the work seriously enough. They
cancelled a couple of week-ends off and we all had to stay here and practice
report writing. Morale among the JOT'S is down and resentment against the staff
gets higher every day. Four of the outstanding trainees have quit — two of them in
order to take appointments as Foreign Service Officers with the State
Department.

The problem grew out of the way most of us handled the practical exercises
with the political-action agent — practically all of us were crucified in the
criticism sessions for not having developed proper control over the agent before
moving into sensitive assignments. The instructors accused us of adopting
whimsical attitudes — what they call derisively the 'cowboy approach'. Besides
agent-control failure, the staff is down on us for not taking pains with tradecraft
in the practical exercises. A couple of weeks ago several teams got arrested while
photographing a huge chemical plant about twenty miles from here — they were
caught by security patrols, turned over to the police, and then had to be bailed out
through the base administration office. It was supposed to be a clandestine

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photography assignment in a denied area and those guys climbed over the fence
and started snapping like they were at the beach in August.

The extra night sessions in tradecraft are supposed to emphasize the dangers
in taking shortcuts on how clandestine operations are performed — as opposed to
what is done (FI, CI and PP operations). Tradecraft is all the techniques and tools
of the trade used to keep a secret operation secret. The tradecraft one selects
depends on a correct analysis of the operational environment — the set of
conditions that determine the degree of clandestinity needed, including the
capabilities of local services, and the strength of the local target organizations
against which our operations are directed. The more relaxed the operational
environment, the more simple and uncomplicated the tradecraft and the more
mileage obtained from each CIA officer.

Tradecraft is used to keep an operation secure and free from discovery
because, among many reasons, people's lives are often at stake. The instructors
keep driving home the importance of care to protect the agent, and they toss out
example after example of fatal and near-fatal consequences of poor tradecraft.
The techniques include how to select a meeting-site, counter-surveillance before
and after clandestine meetings, the use of disguise, safety and danger signals
before meetings, concealment devices, precautions in the use of telephones, ways
to counter possible audio penetration of meeting-sites, the use of cutouts or go-
betweens to avoid frequent direct contact between agents and CIA officers, and
communication techniques.

Cover is closely related to operational security because it is the lie
established to make a secret operation appear to have a legitimate purpose. A
foundation may serve as a cover funding mechanism. A shipping company may
serve as cover for maritime operations. An airline may serve as cover for air
support to paramilitary operations. A legitimate business activity may serve as
ostensible employment for a CIA officer in a foreign country. The State
Department, Defense Department and the International Cooperational
Administration may also serve as cover employment for CIA officers.

Communications with agents is perhaps the most crucial element of
tradecraft and operational security. Personal meetings between CIA officers and
their agents are often the most efficient type of communication but they are also
the most dangerous and require elaborate security precautions and cover.
Meetings can take place ilnhotels or apartments obtained for this purpose (safe
houses), vehicles, subways, parks, isolated woods, tourist attractions. Normal

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communications may also be through cutouts and dead drops (hiding-places like
the hollows of trees where messages can be placed). Brush contacts, such as the
momentary contact for passage of a report, can be used in public lavatories or
pedestrian tunnels where motion is uninterrupted and hostile surveillance
difficult.

Communications with agents in denied areas (Iron Curtain countries) where
counter-intelligence forces are most effective, is often through encoded radio
transmissions to the agent, which can be heard on ordinary home radios — while
the agents' reports are made in invisible writing and sent to a drop address in a
noncommunist country through the international mails. In such cases personal
meetings would be restricted to emergencies or when the agent is able to travel to
a non-communist country. Elaborate signal systems can be established to indicate
safety, danger, discovery, loading or unloading a dead drop, request for meeting,
postponement of meeting.

In every clandestine operation some form of training is usually involved,
from simple reminders on security precautions to highly specialized instructions
in the use of complicated technical equipment. In FI operations, continuous
training is needed for refinement of the agent's reporting in such areas as
separation of fact from rumour and opinion, specification of sources, correct
dates, places and names, and spelling and format in written reports. The Office of
Training has a staff of multilingual training officers in its Covert Training Branch
who travel the world giving specialized operational training to agents on station
request. The Technical Services Division personnel are also heavily engaged in
agent training as is the Office of Communications which is in charge of training
agents in the use of radio equipment and cryptographic materials.

Shortcuts in tradecraft on the practical exercises is not the main reason for
the training staffs toughening up. The real reason is attitudes — they want us to
get as serious about all this as they are, and they are focusing on agent-control
factors in order to drive this home. Maybe we'll all have to become heavies in
order to pass the course.

The importance of agent control is paramount because agent control means
the ways an agent is made to do what the CIA wants him to do. Each agent is
different and not everyone is always willing to do exactly what we want him to
do — sometimes he has to be coaxed, sometimes cajoled, sometimes threatened.

'Agent' is a word that is used to signify the people who work at the end of the
line. Usually they are foreigners and the instruments through which CIA

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operations are executed. The word 'agent' is never used to describe the CIA career
employee who functions in a station as an operations officer — more commonly
known as a case officer. We are all being trained to be case officers, not agents.

There are different types of agents in CIA parlance. Many operations are
structured under the leadership of a single agent to whom other agents respond
either as a group working together or in separate, compartmented activities. The
single agent who runs an operation under station direction is known as the
principal agent and the others as secondary or sub-agents. The chief of a five-
man surveillance team is a principal agent while the foot-men and drivers are
sub-agents. An action agent is a person who actually provides secret information,
e.g. a spy in a communist party, whereas a support agent performs tasks related
to an operation but is not the source of intelligence, e.g. the person who rents an
apartment for meetings between an action agent and the station case officer.

Case officers must constantly be searching for new agents to improve
ongoing operations and to mount new, better operations. Agent spotting,
therefore, is the activity whereby potential new agents are brought under
consideration. Agent development is the manner in which a potential agent is
cultivated and tested while agent assessment is the evaluation of whether and
how the potential agent can be used effectively. If, after weighing all available
data, a positive decision is reached for recruitment, the formal clearance
procedure is completed through the Headquarters Operational Approval system.
Agent recruitment can take many forms, often determined by the type of
operation for which the agent is needled and by the history of agent development.

If your objective is to penetrate a leftist political party, the first thing to do is
to probe for a weak spot in the organization. You might bug the phone of a
leading party member and find out he's playing around with the party's funds. In
that case, perhaps he can be blackmailed. Or perhaps one of your agents plays on
the same soccer team as a party member, or goes out with his sister. The agent
might learn something about the party member that seems to make him a good
prospect. Then you move in and make an offer.

On certain occasions recruitments are made in the name of the CIA,
especially when involving US citizens and high-level targets for PP operations.
But often recruitment can be effected without explicit sponsorship with the target
simply expected to assume that the CIA is the sponsor. Thousands of policemen
all over the world, for instance, are shadowing people for the CIA without
knowing it. They think they're working for their own police departments, when,

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in fact, their chief may be a CIA agent who's sending them out on CIA jobs and
turning their information over to his CIA control. On other occasions false flag
recruitments are more appropriate so that the target believes a service or
organization other than the CIA is the sponsor, perhaps his own government, or
even Peking or Havana. You don't let the recruit know he'll be working for the
United States, because if he knew that, he might not consent to do it. Coercive
recruitment of a communist party member in an underdeveloped country (under a
threat made to appear to come from a local security service) may be more
effective to start with than revealing CIA sponsorship. Later, when financial and
other means of control have been established, the recruited agent may be brought
gradually to the knowledge of true sponsorship.

In nearly all cases involving agents aware of their CIA sponsorship, a direct,
personal relationship is established between the agent and the case officer. Since
control of agents is so much more effective by persuasion than by threat, the
development of personal rapport by the case officer with the agent receives
constant emphasis from our instructors. On the other hand, agent-handling
officers are expected always to maintain the upper hand and to avoid dangers that
can give an agent a handle against him, or any of the different varieties of falling
in love with your agent'.

However, as almost all operations depend upon money, delicate treatment of
financial matters can be used as a constant control factor without insulting the
agent by treating him as a mercenary. In rich countries a man might become an
agent for ideological reasons, but in poor countries it's usually because he's short
of cash. A man with a hungry family to support will do almost anything for
money. The amounts paid to agents depends on local conditions. In a poor
country $ 1 00 a month could get you an ordinary agent. In many countries $700 a
month could get you a cabinet minister. Payment is made in cash — you can't pay
spies by check. At the end of every month officers deliver pay envelopes to their
agents around town; they meet in cars or safe houses. Agents should be made to
count the cash in front of the officer so that any mistakes can be corrected
immediately.

Firm guidance of agents, especially those involved in PP operations, where a
wide variety of alternatives is usually presented, depends largely on the
personalities of the agent and the case officer, and the twin requirements of
control and rapport present continuing problems. Capability for detached

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manipulation of human beings is a cardinal virtue of the CIA case officer and
nobody makes any bones about it.

Agent termination and disposal is the way an agent is unloaded when he's no
longer needed or wanted. It can be touchy and complicated. Much depends on
whether the termination is friendly or hostile and the reasons for it. Once the
principle of terminating an operational relationship is established with an agent,
the procedure usually becomes one of negotiating a financial settlement and quit-
claim. The financial settlement may depend ostensibly on past services rendered
by the agent, but under the surface both sides often negotiate on the basis of the
damage a dissatisfied agent could cause if termination were not to his liking.
Again the control exercised by case officers over the agent during the entire
period of employment will reflect on termination negotiations. Efforts by
terminated agents to get back on the payroll after having spent their termination
bonus are not uncommon. When asked just how drastic agent termination and
disposal might become in difficult circumstances, the instructor declined
comment without disallowing 'final solutions'.

Camp Peary, Virginia June 1960

This month the emphasis has been on technical operations and we have had
to incorporate these skills in the practical exercises, including the training of our
'agents'. The heat from the training staff over tradecraft and agent control is still
on, but we're getting used to it now. It looks as if they're trying to build up to a
peak of tension for the final week of practical exercises — five or six days of
intense operations in the same war-games scenario either in Baltimore or New
York. But the past weeks have mostly been dedicated to long hours in
laboratories learning basic skills in the four main technical functions: audio,
photography, flaps and seals, and secret writing.

Audio operations include telephone tapping and all the different techniques
of bugging. The most common and secure way to tap telephones is through
connections made in the telephone exchange — sometimes by a unilateral agent
but usually through a request to the local liaison service. But in certain
circumstances telephone intercepts 'off the line' (meaning connections made
somewhere between the target telephone and the exchange) are more advisable.
There are also small transmitters that can be placed inside a telephone and TSD

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has developed a pencil-sized transmitter that can be attached to telephone wires
outdoors for reception in a listening post (LP) not far away.

Telephones and telephone lines can also be valuable for full audio
penetration of the rooms where the telephones are located. This technique calls
for the activation of the telephone mouthpiece so that it will pick up all
conversations in the room, even when the telephone is cradled, and transmit these
conversations down the telephone lines. This technique is called the 'hot mike'.

The simplest and most dependable audio operation is the 'mike and wire' job,
consisting of a concealed microphone with a wire leading to a listening-post
where an amplifier and recorder are located. But this technique is also insecure
because the wire can be followed and unpleasant surprises given to the LP
keepers. So the mike and wire can be connected to a hidden low-powered radio
transmitter for reception in an L P protected by being separated from the bugging
equipment. Transmitters can be connected to house current or operated with
batteries.

Switches on transmitters are often desirable especially in audio operations
against the Soviets, Chinese and satellite governments because of their regular
counter-audio sweeps in which wide-range receivers are used to detect radio
transmissions. Visiting sweep teams pose as diplomatic couriers sometimes, and
transmitters have to be shut down when they are in town. This necessitates
constant reporting from station to station on the movements of diplomatic
couriers and suspected sweep officers.

The carrier-current technique is similar to the regular transmitter installation
except that the transmission is made through electric power lines instead of
through the air. This technique is convenient for easy switching and has an
unlimited power supply, but LP location is complicated because the transmissions
will not jump electric power transformers.

Installation of audio devices often requires drilling through walls, floors or
ceilings, for which TSD has demonstrated a large variety of drills, some with
diamond bits, but drilling isn't recommended for the inexperienced. Even TSD
technicians have been known to make the irreparable mistake of drilling large
holes all the way through the wall or ceiling of a target room. Reducing the size
of drilling equipment in order to reach the final pinhole takes fine calculation and
infinite patience. Audio installations often require concealment afterwards, for
which TSD has their Plaster Patching and Paint Matching Kit. This consists of

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super-quick-drying plaster, some fifty colour chips with mixing formulas for
colour approximation, plus odourless super-quick-drying paint.

Listening-post equipment for telephone taps usually consists of a Revere
(ape-recorder and an actuator/dial recorder that starts the recorder when a
telephone rings or when it is uncradled. Numbers called from the target telephone
are also recorded on a paper tape. LP equipment for other audio operations may
include FM radio receivers such as the military-supplied SRR-4 with a 50-200
megacycle range, headphones and a variety of tape-recorders. When switches are
used the LP has a suitcase-package radio transmitter that transmits one frequency
to turn a switch on, and another frequency to turn a switch off. But switches
haven't been perfected yet and they cause problems by jamming in the on or the
off positions.

The research and development programmes of the TSD Audio Branch are
dedicated to improving equipment like the switch systems and to development of
sub-miniature microphones and transmitters for casting into innocuous objects
like light-switches and electrical outlets — also to the development of new
techniques. One new technique is the activation of cradled telephones (the 'hot
mike') by sending a current down the line to the telephone without the need to
make a complicated installation in the telephone itself. Another fascinating
technique under development is the use of infra-red beams that can be bounced
off windows and that carry back to the receiving equipment the conversations
being held in the room where the target window is located. This technique
captures the conversations from the vibrations of voices against the window-
panes.

Still another new technique involves the use of cavity microphones like the
one discovered in the eagle's beak of the Great Seal given by the Soviets to the
American Ambassador in Moscow and which he placed in his office. The cavity
microphone is a simple plastic spoon-shaped object that can be activated by a
radiowave of a certain frequency. The spoon reacts by transmitting another radio
signal that carries the voice vibrations from the room to an appropriate receiver.
That Soviet-made Great Seal was included in a display of audio equipment with
the admission that the Soviets are far ahead in this particular field.

In photography we have learned to use a variety of cameras for general
purpose and documents. 35-mm cameras like the Exacta, Leica and Pentax are
the favourites of the instructors, although the tiny Minox is more secure for
agents. We've been practising also with clandestine photography using cameras

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that can be concealed in a briefcase or innocuous package — even underneath a
shirt with the lens opening disguised as a tie clasp. Darkroom training-sessions
have concentrated on selection of films, paper and developing chemicals. In the
practical exercises each of us incorporated both document and outdoor
photography with developing and printing in the dark-rooms.

The really boring technical skill is Flaps and Seals (F & S). This is the
surreptitious opening and closing of letters and other containers such as
diplomatic pouches. For a week we practised with hot plate, tea kettle and the
variously shaped ivory tools fashioned- from piano keys and used for gently
prying open envelope flaps. But the most effective technique for letters is the
flat-bed steam table (about the size of a briefcase) that contains a heating element
encased in foam rubber. Steam is created by placing a damp blotter on the top of
the heated table, and most letters open in a matter of seconds after being placed
on the blotter. Careful resealing with cotton swab and clear glue completes the
process.

Secret writing (SW) is the communications system used for concealing or
making invisible a secret message on an otherwise innocent letter or other cover
document. SW systems are categorized as wet systems, carbons and microdot.
The wet systems use chemicals, usually disguised as pills, which dissolve in
water to form a clear 'ink'. The secret message is written on a sheet of paper,
preferably high-quality bond, using the end of a wooden swab stick that has been
tapered with a razor-blade and soaked in the 'ink' to reach the proper tip
flexibility. Before and after writing the message the paper must be rubbed with a
soft cloth on both sides in all four directions to help conceal the writing within
the texture of the paper. The paper with the secret message is then steamed and
pressed in a thick book and after drying, if no trace of the message can be seen
under ultra-violet and glancing light, a cover letter or innocuous message is
written.

Carbon systems consist of ordinary bond paper that has been impregnated
with chemicals. The carbon is placed on top of the message sheet and the secret
message is written on a sheet placed on top of the carbon. Applying the proper
pressure when writing the secret message with a pencil on the top sheet transfers
the invisible chemical from the carbon to the message sheet on the bottom. The
cover letter is then written on the opposite side of the message sheet from the
secret message.

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On receipt of an SW letter, an agent applies a corresponding chemical
developer, rolling the developer with a cotton swab on to the page, and soon the
secret message appears.

The microdot system involves a small camera kit with which a letter-sized
page can be photographed on an area of film no larger than the dot of an 'i'. The
microdot is glued over the dot of the T or a period of a cover letter. Although the
equipment for microdots is incriminating, the microdots themselves are very
secure and practically impossible to discover. On the other hand they require very
tedious processing and can only be read with a microscope.

Secret messages can be written either in clear text or encoded for greater
security. The SW branch of TSD has a continuous intelligence collection
programme on the postal censorship procedures in most foreign countries for
protective procedures in SW operations. The operational environment in which
the agent works determines the other details of SW correspondence: whether the
SW cover letter will be posted nationally or internationally, to a post-box or a
support agent serving as an accommodation address, with false or true return
addresses or none at all, the content of the cover letters, signals to indicate safety
or the absence of which could indicate that the writing is being done under
control of a hostile service.

The SW branch also has a technique for' lifting's w from suspect
correspondence. The process involves placing a suspect letter in a letter press
with steamed sheets on either side. By cranking down pressure enough of the
chemicals will come off on the steamed sheets to allow for testing with other
chemicals for development. The suspect correspondence can be returned to the
mails with no traces of tampering.

The TSD instructors have also demonstrated some of their techniques in safe-
cracking, surreptitious entry and lock-picking. But these are such highly
specialized activities that TSD technicians almost always travel to countries
when these talents are needed. As ordinary case officers we will need only the
basic skills and enough knowledge of the really special techniques to know how
to plan and when to ask for TSD technicians.

A few weeks ago I was discharged from the Air Force. Now I'm a civilian
employee of the Department of the Air Force, as I was when I came to
Washington three years ago. The cover unit is another bogus Pentagon office
with the major, the colonel and all that routine. But I'm keeping my commission

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(I'm a First Lieutenant now) by joining an Agency Air Force reserve unit. This is
a cover unit too.

Last week Ferguson came down from headquarters and he opened his session
with me with a speech on the increasing demand in the Western Hemisphere
Division for new case officers — apparently Castro and the Cuban Revolution are
causing more and more problems all over Latin America. My reaction is
disappointment, what with all my old fantasies of being a cloak-and-dagger
operative in Vienna or Hong Kong. But Ferguson said I could ask for a transfer if
after six months I still don't like it. It looks like ten or fifteen of us are destined
for the Western Hemisphere Division so maybe it won't be so bad. Besides, all
those hours in the language lab may at last be useful.

Notes:

1. See Chart l,p. 630.

2. Later known as the 54-12 Group, the Special Group, the 303 Group, the
Forty Committee.

3. Later renamed the United States Intelligence Board.

4. Renamed in 1961 the President's Foreign Intelligence Advisory Board.

5. See Chart 2.

6. See Chart 3.

7. See Chart 4.

8. See pp. 319-20.

9. See Chart 5.

10. Predecessor of the Agency for International Development (AID).

11. Later known as the International Student Conference (ISC).

12. Later renamed the World Confederation of Labor.

79

Part Two

Washington DC July 1960

The training programme has ended at last. We spent the last week of June in
Baltimore running .in and out of department stores chasing our instructors on
surveillance exercises. It was just like earlier exercises in the cities in Virginia
except it went on day and night and included bugging hotel rooms, loading and
unloading 'dead drops', writing invisible messages, and several difficult agent
meetings. Most of us spent the few free hours at night at the Oasis on East
Baltimore Street — without par in really raunchy, fleshy, sweaty stripping.

My feelings were mixed about leaving Camp Peary. It was an isolated sort of
life but the club was fun — the bar, ping-pong, chess. What I'll miss most is the
athletic programme and that nice gym.

After a short vacation I checked back with Ferguson J and he sent me over to
the personnel officer in the Western Hemisphere (WH) Division. He didn't seem
to have expected me and after waiting a couple of hours he sent me to the
Venezuela desk, which, I discovered, consists of the desk officer, a secretary, and
now me. We are part of Branch 3 of WH Division which covers the Bolivarian
countries: Venezuela, Colombia, Ecuador, Peru and Bolivia - and we also handle
matters related to the Dutch islands, Aruba and Curacao, British Guiana and
Surinam. Branch 1 has Mexico and Central America, Branch 2 has the
Caribbean, Branch 4 has Brazil and Branch 5 has the cono sur. Uruguay,
Paraguay, Argentina and Chile. Cuban affairs are centred in a special branch and
the paramilitary operation (it looks like a repeat of the Guatemala operation but I
can't get many details) has taken over a wing of Quarters Eye. All the rest of the
division is in Barton Hall near Ohio Drive and the Potomac.

WH Division Is the only area division of the DDP that isn't over in the
buildings along the Reflecting Pool, and more and more I've been getting the
impression that this division is looked down upon by the rest of the DDP. It
seems that the physical separation of the division from the rest of the DDP has
created the concept of WH as a fiefdom of Colonel J. C. King % — he's been WH
Division Chief now for some years. The other reason for disdain towards WH (I
hear these stories from JOT's who have been assigned to other divisions) is that
most of the division leadership — the branch chiefs and the station chiefs in the
field — are a fraternity of ex-FBI officers who came into the CIA in 1947 when
the CIA took over FBI intelligence work in Latin America.

INSIDE THE COMPANY: CIA DIARY

It's embarrassing because they call us the 'gumshoe division', even though the
best communist party penetration operations are in Latin America — WH in fact
was responsible for getting the secret Krushchev speech to the 20th CPSU
Congress, which the Agency made public long before the Soviets wanted it to be.
And everybody knows about Guatemala. The problem is that the glory for super-
spooky achievements is enjoyed mostly by EE officers — old hands from Berlin
and Vienna. We'll see how they treat us after Castro gets thrown out!

I can't say I'm wild about the work I've been given. I inherited a desk full of
dispatches and cables that nobody had done anything about and trying to make
sense out of all this is frustrating — I have to keep bothering people to find out
what all the office symbols mean on the routing sheets, who takes action on what,
and which is more and which is less important. Most of my work is processing
name checks and reports.

The name checks are even duller than processing reports. The first one I did
was on some Jose Diaz and I didn't realize it was such a common name. When I
got the references back from Records Integration Division (RID) there were over
a thousand traces on people of that name. Trace requests for RID have to be
narrowed down by date and place of birth and other identifying data. The bulk of
the name checks are for the Standard Oil subsidiary in Venezuela — the company
security officer is a former FBI man and he checks the names of prospective
Venezuelan employees with the CIA before hiring — trying to keep out the bad
guys.

This work routine has to improve — I can't spend a couple of years on reports
and name checks.

Washington DC August 1960

I must be living right — and I'm almost too afraid to think about it — but I may
just get a field assignment sooner than I could ever imagine. Yesterday morning
my desk chief, C. Harlow Duffin, J asked me if I was interested in working
overseas as he knows of an operations officer slot opening up next month in
Quito, Ecuador, and if I'm interested he'll see what he can do. But he said nobody
talks about field personnel assignments before they're approved so I've got to
keep it secret until he says I can talk. Next month! But he said I wouldn't go right
away. First, I'll have really to learn Spanish, then process into the Department of
State — lots of details to take care of first.

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Yesterday morning I picked up a book and some briefing material from the
Ecuador desk, and I've been reading this instead of doing my work. I can't seem
to lay it aside. Talk about banana republics and underdevelopment! Ecuador must
be classic: torn apart as it is by internal contradictions and ruled by privileged
oligarchies while bigger neighbours gobbled up enormous territories that
Ecuador couldn't defend.

The overwhelming international reality for Ecuador is Peru and the 1942
Protocol of Rio de Janeiro whereby Peru made good its claim to over one third of
what until then Ecuadoreans had considered national territory. In July and August
1941, after several months of negotiations had failed, Peruvian troops
overwhelmed Ecuadorean defences in the south — and in the eastern Amazonian
region. The Rio Protocol was signed after new negotiations and Peru got the
disputed territory, mostly Amazonian jungle. There is a Peruvian side to the story,
of course, but Ecuador will never forgive having to sign the Rio Protocol under
duress. The US was already at war and we needed peace in South America for
our own war effort. Although the Peruvian victory in 1 94 1 was only the latest in
a series of disputes that go all the way back to pre-hispanic history, for Ecuador,
easily defeated and claiming dismemberment by force, the Rio Protocol is a
source of national humiliation less than one generation removed. The US
government is deeply involved because we promoted negotiation of the Rio
Protocol and are still responsible for enforcing it — along with the other guarantor
powers: Brazil, Chile and Argentina.

While Peru is the great international reality for Ecuador, the dominant
national reality is the division of the country between sierra and coast. Although
the Andes split the country down the middle, the eastern region is mostly tropical
jungle divided by Amazonian tributaries. Some years ago exploration was made
for petroleum but the cost of a pipeline over the Andes wasn't justified by the
discoveries. The oriente, then, with its sparse population (including head-
shrinking Indians) counts very little in the national life. The other two regions,
the Andes highlands and the Pacific coast, are almost equally divided in area and
population, and their interests are traditionally in conflict.

Liberal revolution came to Ecuador in 1895 and the main victim was the
Church, as the dominant coastal forces behind the revolution took control of
national policy out of the hands of the traditional sierra landowners. Church and
State were separated, lay education was established, civil marriage and divorce
were instituted, and large Church properties were confiscated.

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Following the revolution in 1895 the Liberal Party dominated Ecuadorean
politics as liberals joined conservatives in the landowning aristocracy while
conditions changed very little for the overwhelming mass of the population
completely outside the power structure. Even so, Ecuadorean politics in the
twentieth century is not just another history of violent conservative-liberal
struggle for spoils of office — it is indeed that, but much more. Ecuador has one
of the most amazing Latin American politicians of the century: Jose Maria
Velasco Ibarra — elected President once again just two months ago. This is the
fourth time he's been elected President and none of his terms have been
consecutive. And of his three previous times in power, two ended before the
constitutional term was over because of military coups against him.

Velasco is the stormy petrel of Ecuadorean politics, a spellbinding orator
whose powers of rhetoric are irresistible to the masses. He is also an authoritarian
who finds sharing power with the Congress very difficult. His politics are as
unpredictable as his fiery temperament and he has taken conflicting positions on
many political issues, thereby attracting support from all established political
parties, at one time or another. He won the June elections by the largest margin
ever attained by an Ecuadorean presidential candidate and he did it in his
typically clever fashion. Running as an independent he allied himself with the
impoverished masses in violent tirades against the ruling oligarchies who, he
claimed, were behind the candidates of the Liberal and Conservative parties. He
called for fundamental economic and social change, an end to rule by oligarchies
and political bosses, and a fairer distribution of the national income. On this
populist appeal Velasco got almost 400,000 votes, a smashing victory, and his
denunciations of the Rio Protocol during the campaign made him the champion
of Ecuadorean nationalism.

Velasco is due to take office in September but the station in Quito isn't taking
any bets on how long he'll last. After three consecutive Ecuadorean presidents
have served out their terms, perhaps the instability of the past is ending. Velasco's
term is for four years, but taking into account the fact that he is Ecuador's 70th
President in 130 years of independence one can't be too sure. I hope I'll be there
to see.

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Washington DC August 1960

I know I'm over-eager and impatient but I thought I'd go mad during the
week they were deciding. Duffm finally called me in and said the Branch Chief,
Edwin Terrell, J had approved my nomination and that the reaction in Colonel
King's office was also favourable. The officer who is in the position now is being
transferred to Guayaquil as Base Chief in September and the station is calling for
a replacement right away. The WH personnel officer is arranging for me to go
into full-time Spanish training with a tutor so that I can get to Quito as soon as
possible. Cover for the job is Assistant Attache in the US Embassy political
section, which means I'll have diplomatic status and 'integration' with the State
Department as a Foreign Service Officer.

Then Duffm let me in on a secret. He said he is scheduled to go to Quito as
Chief of Station (COS) next summer which is why he picked me. Meanwhile, he
said, I'll be working with one of the best-liked COS's in WH Division: Jim
Noland. J Even with the Spanish training and the time needed for State
Department integration, Duffm says I'll still be in Quito before Christmas.

Duffm then set up a meeting for me with Rudy Gomez, J the Deputy
Division Chief who gives the final approval on all lesser personnel assignments.
He's a gruff sort. Without looking up he said that if I didn't have a good reason
for not going to Quito, then I'd have to go. I said I wanted to go, played it real
straight and got his approval. Apparently I'm one of the first of our JOT class to
get a field assignment — the only one I've heard of so far who will get out before
me is Christopher Thoren J who's being assigned this month under State
Department, cover in the US mission at the United Nations.

Washington DC August 1960

Getting to know Ecuador is at once stimulating and sobering. The new
Congress, elected in June with Velasco, opened on 10 August although Velasco
doesn't take office until 1 September. If the tactics of Velasquistas in the
Congress are any indication, the new government may dedicate itself more to
persecuting the Poncistas of the outgoing regime than to governing the country.
The Velasquistas have a wide plurality in Congress but are just short of a
majority. At the opening, which consisted of the annual messages of President
Ponce and the President of the Supreme Court, Ponce was overwhelmed by the

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insults and jeers from the screaming Velaquista-packed galleries, unable to be
heard during the entire three-and-a-half-hour speech. The President of the
Supreme Court, however, followed Ponce and was heard with silence and
respect. Congressional sessions since then have been dedicated to efforts by the
Velasquistas to discredit the Ponce government, and Ponce's two most important
ministers, Government (internal security) and Foreign Relations, have resigned
rather than face humiliation in interpellations (political interrogations) by the
Congress.

Attacks by Velasquistas against Ponce and his supporters reflect traditional
rivalries but are especially acute now because the Velasquistas are beginning to
take revenge for government repression against them during the electoral
campaign and even earlier. The most notorious incident was at a Velasquista
demonstration on 19 March when five Velasquistas were killed and many
wounded. The demonstration was to celebrate Velasco's arrival in Quito to begin
the political campaign after several years of self-imposed exile in Argentina. The
Velasquista campaign that followed was as much a campaign against Ponce and
traditional Ecuadorean oligarchies as it was in favour of political policies
proposed by Velasco. While reform proposals for a fairer distribution of the
national income and more efficient government administration were central to the
Velasco campaign, many are sceptical of his personal stability as well as his
ability to break the power of the one hundred or so families that have controlled
the country for generations.

The people, nevertheless, liked what they heard from Velasco because this
country's extreme injustices and poverty are so acute. Not only is Ecuador the
next-to-the -poorest country of South America in terms of per capita annual
income (220 dollars — about one third of Argentina's and less than one tenth of
ours) but even this low average amount is extremely unevenly divided. The top 1
per cent of the population receives an income comparable to US standards while
about two thirds of the population get only on average a monthly family income
of about 10 dollars. This lower two thirds, consisting largely of Indians and
people of mixed blood, are simply outside the money economy, completely
marginalized and without social or economic integration or participation in the
national life.

Except among those who would be adversely affected, there is wide
agreement that the root of Ecuador's extremes of poverty and wealth is in land
tenure. As in other countries the best lands belong to large landowners who

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employ relatively few rural workers and thereby contribute to the growing urban
unemployed. The small plots usually cannot produce more than a subsistence
income due to land quality and size. Even .on the coast where the cash crops of
bananas, coffee, cacao and rice are raised on small- and medium-sized properties,
fluctuating prices, marketing difficulties, scarce credit and low technification
combine for low productivity and a precarious existence for salaried workers.

Thus land reform and a stable market for export crops are fundamental for
the economic development necessary before Ecuador can begin to invest
adequately in facilities for education, health-care, housing and other possible
benefits. Indicators are typical of poor countries: poor diet; high incidence of
debilitating diseases caused by intestinal parasites from bad drinking water;
370,000 children unable to attend school this year because no schools exist for
them; a housing deficit of 580,000 units in a country of 4.3 million.

Solutions to this misery are being sought both externally and internally. In
the external sector the Ecuadoreans are making efforts to stabilize the falling
prices that in recent years have forced them to produce ever greater quantities in
order to sustain imports. Also of great importance is foreign aid obtained in part
from the International Cooperation Administration (ICA) which has a technical
assistance mission in Ecuador. Internally, the Ecuadorean government must
embark on a programme of reforms: agrarian reform to raise productivity and
increase rural employment; fiscal reform to increase government revenues and
redistribute income; administrative reform to improve the government
administration and the myriad agencies that currently enjoy autonomy — and to
reduce corruption. Already a movement is underway to abolish the huasipungo, a
precarious form of tenure, although government land policy is mainly orientated
towards colonization and opening of new lands with limited success. Lowering
the population growth, now up to 3.1 per cent annually, is of obvious importance,
but is hindered by tradition and Catholic Church policy. Somehow all of these
programmes will contribute to raising the rate of economic growth and to
increasing the benefits available to the marginalized two thirds of the population.
Promises for these reforms and increased benefits won Velasco his sensational
victory, and he'll soon have the chance to deliver.

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Washington DC September 1960

For several weeks I've been studying Spanish full-time with a tutor in
Arlington, and on the tapes in the language lab. I'll probably be in this routine
until November when I get integrated to the State Department and take the two-
week orientation course at the Foreign Service Institute. Meanwhile I stop in
each morning to see Duffin and read more background material at the
Ecuadorean desk.

Velasco is now President. He has embarked on two early policies that affect
operations of the Quito station and other matters of concern to us. First, he is
trying to purge all the supporters of Ponce from government employment, and
secondly, he is stirring up the border problem with Peru by declaring the Rio
Protocol null and void.

Immediately after taking power Velasco relieved forty-eight military officers
from their assigned duties and placed them at the disposition of the Ministry of
Defence. Velasco also started a purge in the National Police, starting with the two
senior colonels Who were the station's main liaison agents. They were arrested
and charged with participating in the 1 9 March riot.

More serious was the forced departure of our Station Operations Officer
under Public Safety Cover with the United States Operations Mission (USOM) of
the ICA programme. Our Station Officer, Bob Weatherwax, J had been in the
forefront directing the police during the 19 March riot, and he was clearly
identified because of his very blond hair and red face - practically an albino
colouring. As soon as Velasco was inaugurated Weatherwax and Jim Noland, the
COS, were notified by Jorge Acosta Velasco, J the President's nephew and family
favourite (he has no children), that Weatherwax should leave the country for a
while to avoid being dragged into the prosecutions for the 19 March affair.
Acosta, who is a close friend of both Weatherwax and Noland, made the
suggestion only to be helpful, not as an official act. Nevertheless, Noland agreed
and Weatherwax is now back in Washington killing time until he can return.

The government purge is being run mostly by Manuel Araujo Hidalgo who
was elected to the Chamber of Deputies from Pichincha Province (the Quito
region) and who is now Minister of Government. He was appointed after Velasco
fired his first Minister of Government only a week after taking office. Araujo had
to resign the Deputies seat but he is clearly the leader of the Velasquista mobs.

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Araujo is an extreme leftist and ardent defender of the Cuban Revolution —
exactly the wrong man for the most important internal security job. He is
particularly hostile to the US, and the station is fearful that he may jeopardize the
Public Safety Programme because he is also in charge of the National Police. The
real danger is that all our efforts to improve the government's security capabilities
in preparation for the 11th Inter- American Conference — now just six months
away — may go down the drain.

Araujo's purge is running not only into the military services and the police.
The civilian government employees are also being purged of Ponce supporters —
helped especially by the Congress's repeal of the Civil Service Career Law
passed during the Ponce administration. Velasco obviously wants to pack the
government with his own people.

Velasco's declaration in his inaugural speech that the Rio Protocol is void has
been followed by rising tension and fears that the dispute may jeopardize the
Inter-American Conference. Ecuadoreans are without doubt behind Velasco on
the matter, but Velasco is using the issue to denounce any opposition to his
policies as anti-patriotic and prejudicial to a favourable solution of the boundary
problem. So far the Conservative Party and the Social Christians, while
defending the Ponce administration, have not declared open opposition to
Velasco.

Washington DC October 1960

Headquarters files on the operations of the Quito station and its subordinate
base in Guayaquil reflect the very careful analysis of the operational environment
that is always the framework within which operations are undertaken. Although
the analysis includes assessments of such factors as security and cover, the most
important part deals with the enemy.

The Communist Party of Ecuador (PCE)

Although the PCE has been a legal party since World War II, it has never
been able to obtain the 5000 signatures necessary for inscribing candidates in
national elections. However, Pedro Saad, the PCE Secretary-General, held the
seat as Functional Senator for Labour from the coast from 1947 until last June
when he was defeated through a Guayaquil base political-action operation. (The

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Ecuadorean Senate has a number of 'functional senators' from coast and sierra
representing special interest groups, e.g. labour, commerce, education,
agriculture, the military services.) Membership in the PCE is estimated by the
station at around 1000 with perhaps another 1000 members in the Communist
Youth of Ecuador (JCE). Almost all of the members of the PCE National
Executive Committee reside in Guayaquil. With respect to the emerging Sino-
Soviet differences the PCE national leadership supports the Soviets although
some PCE leaders in the sierra, particularly in Quito, are beginning to lean
towards the more militant Chinese position.

In the elections this year the PCE joined with the left wing of the Socialist
Party and the Concentration of Popular Forces (CFP) to back a leftist candidate
for President, the Rector of Guayaquil University, who received only about
46,000 votes — just 6 per cent of the total. PCE strength, however, is not
measured in voter appeal but in the strength of labour, student and youth
organizations in which its influence is strong.

The Socialist Party of Ecuador (PSE)

Although much larger than the PCE, the Socialist Party has cooperated for
many years with the Communists in the leadership of the labour movement.
Recently the Socialists have split into a right wing which formed an alliance with
the Liberal Party in the unsuccessful presidential campaign of Galo Plaza this
year, and a left wing which voted with the PCE and the CFP.

Because of its support for the Cuban Revolution and of violent revolutionary
principles, the left-wing Socialists are dangerous and inimical to US interests.
Their successes, however, are concentrated in the labour movement and
intellectual circles. The President of the Ecuadorean Workers' Confederation is a
leftwing Socialist as is the Functional Senator for Labour from the sierra.

The Ecuadorean Workers Confederation (CTE)

Founded by the Communists and the Socialists in 1944, the CTE is by far the
most dominant labour confederation in Ecuador and a member of the World
Federation of Trade Unions (WFTU). Although the Secretary-General of the
PCE, Pedro Saad, headed the CTE at the beginning, a Socialist took over in the
late 1940s and this party is still in nominal control. However, the Communists

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retained the number two position and are now considered to exercise dominant if
not complete control in the CTE. CTE membership is estimated at 60,000 — less
than 1 0 per cent of the poorly organized labour force, but enough to cause serious
trouble.

The Ecuadorean Federation of University Students (FEUE)

Consistent with the traditional leftist-activist student movement in Latin
America, the FEUE — the principal Ecuadorean national student union — has been
under frequent, if not continuous, control by PCE, JCE and left-wing Socialists.
Its loud campaigns are directed against the US presence in Ecuador and Latin
America, mainly US business, and strongly in support of the Cuban Revolution.
When appropriate issues are presented the FEUE is capable of mobilizing the
students, secondary students included, for strikes and street manifestations as
well as propaganda campaigns. It is supported by leftist professors and
administrators in the five state universities in Quito, Guayaquil, Portoviejo,
Cuenca and Loja.

The Revolutionary Union of Ecuadorean Youth (URJE)

In 1959 the youth organizations of the Communists, the Socialists and the
Concentration of Popular Forces formed URJE which has become the most
important leftist-activist youth movement. It engages in street demonstrations,
wall-painting, circulation of flysheets, intimidation — agitation of many kinds for
revolutionary causes. Although URJE denies that it is a communist front, the
station considers it under PCE control and the most immediate and dangerous
threat for terrorism and armed insurgency. It is stronger in Guayaquil than in
Quito, and its membership in both places totals about 1000. URJE gives
unqualified support to the Cuban Revolution and several URJE leaders have
travelled to Cuba, probably for revolutionary training.

Hostile Elements in the Ecuadorean Government

The Velasquista movement, as a heterogeneous populist movement contains
political colourings from extreme right to extreme left. The Minister of

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Government, Manuel Araujo Hidalgo, is our most important enemy in the
government, but others, such as the Minister of Education and various appointees
to lesser posts, are also dangerous. The station has a continuing programme for
monitoring leftist penetration in the government, and the results are regularly
reported to headquarters and to the Ambassador and the State Department. Aside
from the National Government, the mayors of the provincial capitals of Ambato
and Esmeraldas are Revolutionary Socialists.

The Cuban Mission

The Cuban Embassy consists of the Ambassador and four officials. The
station lacks concrete information on support by the Cuban Embassy to
Ecuadorean revolutionary organizations, but their overt contacts with extreme
leftists leave little doubt. Araujo is their angel in the government and of course
they are supported by leftists throughout the country. While the station is making
efforts to penetrate the Embassy — and the Guayaquil base is doing the same
against the one-man Cuban Consulate — the main CIA drive is to promote a break
in diplomatic relations through propaganda and political-action operations.

The Czech Mission

Ecuador broke diplomatic relations with Czechoslovakia in 1957 but during
his last week in the presidency, Ponce received the Czech Minister to Brazil and
relations were again established. The station expects that within a few weeks or a
little longer the Czechs will try to establish a diplomatic mission in Quito which
undoubtedly will include intelligence officers.

Operations of the Quito station and the Guayaquil base are directed against
these targets and are laid down in the Related Missions Directive (RMD) for
Ecuador, which is a general statement of priorities and objectives.

PRIORITYA

Collect and report intelligence on the strength and intentions of communist
and other political organizations hostile to the US, including their international

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sources of support and guidance and their influence in the Ecuadorean
government.

Objective 1: Effect agent and/or technical penetrations at the highest possible
level of the Communist Party of Ecuador (PCE), the Socialist Party of Ecuador
(PSE-revolutionary), the Communist Youth of Ecuador (JCE), the Revolutionary
Union of Ecuadorean Youth (URJE) and related organizations.

Objective 2: Effect agent and/or technical penetration of the Cuban missions
in Ecuador.

PRIORITY B

Collect and report intelligence on the stability of the Ecuadorean government
and on the strength and intentions of dissident political groups.

Objective 1: Maintain agents and other sources at the highest levels of the
government, the security services and the ruling political organization.

Objective 2: Maintain agents and other sources in opposition political parties,
especially among military leaders favourable to opposition parties.

PRIORITY C

Through propaganda and psychological warfare operations: (1) disseminate
information and opinion designed to counteract anti-US or pro-communist
propaganda; (2) neutralize communist or extreme-leftist influence in principal
mass organizations or assist in establishing or maintaining alternative
organizations under non-communist leadership.

Objective 1: Place appropriate propaganda in the most effective local media.

Objective 2: Support democratic leaders of political, labour, student and
youth organizations, particularly in areas where communist influence is strongest
(Ecuadorean Federation of University Students (FEUE); Ecuadorean Workers

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Confederation (CTE)), and where democratic leaders may be encouraged to
combat communist subversion.

That is a sizeable order for such a small station and base — although the CIA
budget for Ecuador is a little over 500,000 dollars for this fiscal year. The Quito
station consists of the Chief, James B. Noland; } Deputy Chief (this job is vacant
and will not be filled until early next year); one operations officer which is the
job I'm being sent to; a reports officer, John Bacon, J who also handles several of
the most important operations; a communications officer; an administrative
assistant (she handles the money and property and doubles as Noland's
secretary); and a secretary-typist. The entire station is under cover in the political
section of the Embassy with the exception of Bob Weatherwax, J the operations
officer under Public Safety cover in USOM.

The Guayaquil base forms the entire small political section of the Consulate,
consisting of a base chief, Richard Wheeler, J (my predecessor in Quito); one
operations officer; an administrative assistant who also handles communications;
and a secretary-typist.

The general directives of the RMD are put into practice through a number of
operations, making use of agents we have recruited, and which are summarized
now in some detail, first so far as the main station at Quito is concerned, then for
the Guayaquil base.

Quito Foreign Intelligence and Counter-intelligence Operations (FI-CI)

ECSIGIL. This is our most important penetration operation against the
Communist Party of Ecuador and consists of two agents who are members of the
PCE and close associates of Rafael Echeverria Flores, principal PCE leader in the
sierra. The agents are Mario Cardenas, % whose cryptonym is ECSIGIL- 1, and
Luis Vargas, % who is ECSIGIL-2. They have been reporting for about four years
since their recruitment as 'walk-ins' after their disillusionment with the PCE.
Although the agents are close friends and originally came to the station together,
they have since been discouraged from associating too closely, so that if one is
ever blown, the other will not be contaminated. The separation is also designed to
prevent their collaborating over what they report.

Cardenas is directed through a cutout, Mario Cabeza de Vaca % a Quito milk
producer who became a US citizen through military service in World War II but
returned to Ecuador afterwards. He is married to an American who runs the food

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and liquor commissary of the US Embassy. Vargas is directed through another
cutout, Miguel Burbano de Lara, } who is the Quito airport manager of Pan
American-Grace Airways. The cutouts are not supposed to know each other's
identity, although each knows that Vargas and Cardenas are reporting, and they
meet separately with the station Reports Officer, John Bacon, who handles this
operation.

Although neither of these agents holds important PCE elective positions, they
are extremely close to Echeverria and the decision-making process in Quito.
They receive information on practically all matters of importance, and the
ECSIGIL project accounts for an average of about five or six disseminated
intelligence reports in Washington each week.

ECFONE. This operation consists of an agent penetration of the PCE and his
cutout who also reports on the policy and plans of the Velasco government. The
recruitment of the PCE agent, Atahualpa Basantes Larrea, J ECFONE-3, is one
of the more interesting recent station accomplishments. Early in 1960 when the
leaders of Velasco's political movement began to organize for Velasco's return
from Buenos Aires and the presidential campaign, Oswaldo Chiriboga, }
ECFONE, was a Velasquista leader reporting to the station on Velasco's political
campaign. Chiriboga advised one day that he had recently seen his old friend,
Basantes, who had been active in Ecuadorean communism but had drifted away
and was now in dire financial straits. Noland, the COS, directed Chiriboga to
suggest to Basantes that he become more active in the PCE and at the same time
become an adviser to Chiriboga on PCE reaction to the Velasco campaign. Care
was taken from the beginning to establish a secure, discreet relationship between
Chiriboga and Basantes, and Noland provided Chiriboga with modest sums for
Basantes's 'expenses' as adviser — the classic technique for establishing a
developmental agent's dependence on a station salary. Basantes had no trouble
expanding his activities in the PCE and soon he was reporting valuable
information. Chiriboga, of course, moved carefully from innocuous matters to
more sensitive information while easing Basantes into an agent's dependency.
Although the original rational for Basantes's reporting ended with the elections in
J~ne, Chiriboga has since been able to convince Basantes of the continuing need
for his' advice'.

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ECOLIVE. An agent penetration of the Revolutionary Union of Ecuadorean
Youth (URJE), ECOLIVE-1, { is a recent walk-in who is considered to have long-
range potential for penetrating the PCE or other revolutionary organizations into
which he may later be guided. For the moment he is reporting on the activities
and plans of URJE for street demonstrations in support of Velasco's attempt to
nullify the Rio Protocol.

ECCENTRIC. This agent is a physician, Dr. Felipe Ovalle, J with a history
of collaboration with the US government that goes back to FBI days during
World War II. Although he is a Colombian he has lived in Ecuador for many
years where he has a modest medical practice, most of which comes from his
inclusion on the US Embassy list of approved medical examiners for Ecuadorean
applicants for visas. Ovalle's 201 agent file reveals that verification of his
medical degree, supposedly obtained at a Colombian university, has proved
impossible. Through the years he has developed a close relationship with
President Velasco, whom he now serves as personal physician. Ovalle reports the
results of his weekly meetings with Velasco to the station. Occasionally the
information from this operation is interesting enough to disseminate in
Washington, but usually the information is inferior to that of other agents.

ECAMOROUS. The main station activity in security preparations for the
Inter-American Conference is the training and equipping of the intelligence
department of the Ecuadorean National Police. The intelligence department is
called the Department of Special Services of the National Police Headquarters,
and its chief is Police Captain Jose Vargas, } ECAMOROUS-2, who has been
given special training here and in headquarters. Weatherwax, our case officer
under Public Safety cover, works almost exclusively with Vargas, who has been
in trouble recently for being the leader of a secret society of pro-Velasco young
police officers. Secret societies in the police, as in the military, are forbidden.

In spite of all our efforts, Vargas seems incapable of doing very much to help
us, but he has managed to develop three or four marginal reporting agents on
extreme leftist activities in his home town of Riobamba, a sierra provincial
capital, and in Esmeraldas, a coastal provincial capital. Reports from these
sources come ' directly to Vargas, and from him to the station, because there is
little interest in this type of information further up the line in the Ecuadorean

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government. On the contrary, with Araujo as the minister in charge of the
National Police, intelligence collection by a police officer is a risky activity.

Intelligence needs during the Inter-American Conference will have to be
satisfied largely by the station directly through unilateral operations but before
information of this kind is passed to Vargas it will have to be disguised to protect
the source. Although strictly speaking ECAMOROUS is a liaison operation, the
police intelligence unit is completely run by the station. Vargas is paid a salary by
Noland with additional money for his sub-agents and expenses. Some technical
equipment such as photo gear and non-sensitive audio equipment has been given
to Vargas by the station, and we have trained his chief technician, Lieutenant Luis
Sandoval. J

Vargas is young and rather reckless but very friendly, well-disposed and
intelligent. Although he is considered to be excellent as a long-term penetration
of the National Police, he could be worked into other operations in the future. His
first loyalty is undoubtedly to the station, and when asked he is glad to use his
police position as cover for action requested by the station.

ECOLE. This is the station's main penetration operation against the
Ecuadorean National Police other than the intelligence side, and it also produces
information about the Ecuadorean Workers Confederation (CTE). The principal
agent, Colonel Wilfredo Oswaldo Lugo, } ECOLE, has been working with the
US government since hunting Nazis with the FBI during World War II. Since
1947 he has been working with the Quito station, and in the police shuffle and
purge during Velasco's first weeks in office, Lugo was appointed Chief of the
Department of Personnel of the National Police Headquarters.

In contrast with the fairly open contact between Noland and Weatherwax and
Captain Vargas, the intelligence chief, contact between Noland and Lugo is very
discreet. The agent is considered to be a penetration of the security service and in
times of crisis his reporting is invaluable, since he is in a position to give
situation reports on government plans and reactions to events as reflected in
orders to police and military units.

Over the years Colonel Lugo has developed several agents who report on
communist and related activities. Two of these agents are currently active and are
targeted against the CTE. Their reporting is far inferior to PCE penetration agents
such as Cardenas, Luis Vargas and Basantes, but they are kept on the payroll as

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insurance in case anything ever happens to the better agents. Noland also pays a
regular monthly salary to Colonel Lugo.

ECJACK. About two years ago the Army established the Ecuadorean
Military Intelligence Service (SIME) under Lieutenant- Colonel Roger Paredes, $
ECJACK, who then made contact with Noland. Paredes had been trained by the
US Army at Fort Leavenworth some years earlier. In 1959, however, discouraged
by the lack of support from his government for SIME, Paredes suggested to
Noland that he might be more effective if he retired from the Army and worked
full time with the station. At this point SIME was only a paper organization, and
even today is still useless.

Paredes's suggestion to Noland came just at the time the station
investigations and surveillance team was discovered to be falsifying reports and
expenses. The old ECSERUM team was fired and Paredes retired from the Army
to form a new team. He now runs a five-man full-time team for surveillance and
general investigations in Quito and, in addition, he has two reporting agents in
the important southern sierra town of Loja. These two agents are on the fringes of
communist activities there.

Station direction of this operation is entirely through Lieutenant- Colonel
Paredes, who uses the SIME organization as cover and as ostensible sponsor for
the other agents in the operation. Another sub-agent is the chief of the identity
card section of the Ministry of Government. As all citizens are required to
register and obtain an official government-issued identity card, this agent
provides on request the full name, date and place of birth, names of parents,
occupation, address and photograph of practically any Ecuadorean. His main
value is to provide this data for the station LYNX List, which is a list of about
100 communists and other activists of the extreme left whom the station
considers the most dangerous. The LYNX List is a requirement for all Western
Hemisphere stations, to be maintained in case a local government in time of crisis
should ask (or be asked by the US government) for assistance in the emergency
preventive detention of dangerous persons. The ECJACK team spends part of its
time updating addresses and place of employment of current LYNX List
members and in getting the required information on new additions.

The team is also used for following officers of the Cuban Embassy or for
following and identifying persons who visit the Embassy. Their surveillance
work is recognized by the station as clumsy and indiscreet, but plans call for

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additional training, vehicles (they have no team transportation) and perhaps radio
equipment. Paredes, of course, maintains close contact with military officers in
SIME so that the station can monitor that service and confirm the reporting from
the US Army Major who is the Military Assistance Advisory Group (MAAG)
intelligence advisor.

ECSTACY. In the central Quito post office, ECSTACY-1 J is the chief of
the incoming airmail pouch section. As pouches arrive from Cuba, the Soviet
bloc and Communist China, he sets them aside for his brother, ECSTACY-2, {
who passes them to the station. John Bacon, the station reports officer, processes
the letters and returns them the same day for reinsertion in the mails. Payment is
made on a piecework basis. Processing requires surreptitious opening, reading,
photography of letters of interest, and closing. Each week Bacon reports by
dispatch the gist of the letters of main interest, with copies to headquarters and
other interested stations.

As most of the letters are from Ecuadoreans who are visiting the countries
from which the letters are mailed, this postal intercept operation enables the
station to monitor travellers to communist countries and their potential danger
when they return. The letters also reveal leads to possible recruitment of
Ecuadoreans who have been invited to visit communist countries, as well as
those selected for scholarships to schools such as Moscow's People's Friendship
University. Still other letters are from residents of the country where the letter
originates, who are writing to Ecuadoreans who have visited that country.
Attention is paid to possible political disaffection of the writers, for recruitment
as agents in the country where the letter originates.

Since the letter intake amounts to about thirty to forty letters per day, the
ECSTACY operation is time-consuming for the station officer in charge.
Nevertheless it is a valuable support operation and of considerable interest to the
Cuban, Soviet, Eastern Europe and Communist Chinese branches in the DDP in
headquarters.

ECOTTER. Travel control is another standard support function enabling the
station to monitor the movements of communists, politicians and other people of
interest on the flights between Quito and other cities and on the international
flights. ECOTTER- 1, J an employee of the civil aviation office at the Quito
airport, passes copies of all passenger lists to ECOTTER-2, J who brings them to

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the station in the Embassy. The passenger lists, which arrive in the station only
one day after the flights, are circulated for perusal by each station officer and
returned when the new batch is delivered.

ECOTTER- 1 has arranged with airport immigration inspectors to note on the
lists whenever a traveller's passport indicates travel to a communist country or to
Cuba, and this information is reported to headquarters and indexed for station
files. Any travel by people of importance, mainly local communists or
communist diplomats, is reported to headquarters and appropriate stations and
bases where the passenger list indicates they are travelling.

ECTOSOME. The principal station agent for intelligence against the Czechs
is Otto Kladensky, } the Oldsmobile dealer in Quito. His reporting has
diminished since the Czechs were expelled three years ago, but now that relations
have been reestablished he will undoubtedly be in close contact with Czech
officials when they open a Quito Embassy. For the time being he reports on the
occasional visits of Czech trade officials, and he provides the link to a high-level
penetration of the Velasquista movement, ECOXBOW-1.

ECOXBOW. Before this year's political campaign, Noland began cultivating
a retired Army lieutenant-colonel, Reinaldo Varea Donoso, } ECOXBOW-1,
whom he met through Kladensky. Recruitment of Varea, an important leader of
Velasquistas in military circles proceeded with the assistance of Kladensky.
Funds were provided by Noland via Kladensky for Varea's successful campaign
for the Senate, and in August he was elected Vice- President of the Senate. He
reports on military support for Velasco and he maintains regular contact with the
leadership in the Ministry of Defence and the principal military units.

Varea's station salary of 700 dollars per month is high by Ecuadorean
standards but his access to crucial intelligence on government policy and stability
is adequate justification. The project also provides funds for a room rented full-
time in Kladensky's name in the new, luxurious Hotel Quito (built for the Inter-
American Conference) where Kladensky and Varea take their playmates. Noland
occasionally meets Varea in the hotel, but he is trying to keep the relation with
Varea as discreet as possible by channelling contact through Kladensky.

AMBLOOD. Early this year the Miami Operations base, cryptonym
JMWAVE, was established to support operations against the Castro regime in

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Cuba. The Havana station is preparing to continue operations from Miami when
relations with Cuba are broken and the Embassy in Havana is closed. As part of
the Cuban operation stay-behind procedures, the Quito station was asked to
provide accommodation addresses for communicating with agents in Cuba by
secret writing. Lieutenant-Colonel Paredes, the chief of the surveillance and
investigative team, rented several post-boxes which have been assigned to Cuban
agents who -are part of a team located in Santiago, Cuba. The chief of the team is
Luis Toroella, J AMBLOOD- 1 , a former Cuban government employee who has
been trained in the US and is now being sent back to Cuba to head the
AMBLOOD team.

The messages to Cuba are written in secret writing (SW) in Miami and
forwarded by pouch to the Quito station where a cover letter is written by
Francine Jacome, J ECDOXY, who is an American married to an Ecuadorean
and who performs occasional support tasks for the station. The messages from
Cuba to Quito are also written in a liquid SW system and are retrieved from the
post-boxes by Paredes, passed to the station, and forwarded to the JMWAVE base
in Miami.

Quito Psychological and Paramilitary Operations (PP)

ECURGE. The major station agent for placing propaganda is Gustavo
Salgado, f an ex-communist considered by many to be the outstanding liberal
political journalist in the country. His column appears several times per week in
El Comercio, the main Quito daily, and in several provincial newspapers. Salgado
also writes under pseudonyms for wider publication.

Proper treatment of Ecuadorean and international themes is worked out in the
station by John Bacon, who is in charge of this operation too, and passed to the
agent for final draft. Headquarters guidance on propaganda subjects is also
passed over in considerable volume and, on request from other stations, Salgado
can comment on events in other countries to be later replayed there.

Salgado is also extremely useful for publishing intelligence received from
agent penetrations of the PCE and like-minded groups, and for exposing
communist backing for disruptive activities. The agent is paid on a production
basis.

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ECELDER. Fly-sheets and handbills are a major propaganda medium in
Ecuador and the ECELDER operation is a secret means for printing these kinds
of throwaway notice. Five brothers, most of whom have other employment,
divide the work of operating a small family printing business. The family name is
Rivadeneira and the brothers are Marcelo, } Jorge, $ Patricio, } Rodrigo, | and
Ramiro. } The brothers are well known in local basketball circles and have been
the mainstays of the principal Catholic preparatory-school team, La Salle, in its
traditional rivalry with the principal lay preparatory school, Mejia. Noland, who
is also active in basketball circles, handles the contact with whichever brother is
running the printing plant at a particular moment.

The text of the fly-sheets is usually written in the station by John Bacon and
passed to Gustavo Salgado for final draft. After printing they are given to a secret
distribution team. The ECELDER printing plant is a legitimate operation with
regular commercial orders. For the station handbills, fictitious print-shop
symbols are often used because Ecuadorean law requires all printed material to
carry the print-shop symbol. The shop also has symbols for the print shop used
by the communists and related groups, for use when a station-written handbill is
attributed to them.

EC JOB. A team of Catholic university students directed by ECJOB-1 J is
used to distribute the station handbills printed at the ECELDER shop. Because
the handbills have false print-shop symbols and the team distributes without
official permits, techniques for fast, efficient distribution are necessary. Usually
several trucks are rented and as they move swiftly along the crowded Quito
streets the handbills are hurled into the air. Several times team members have
been arrested but ECJOB-1 has been able to buy their freedom without difficulty.
None of the team except the leader himself knows about US Embassy
sponsorship of the operation.

The team is also used for wall-painting, another major propaganda medium
in Ecuador. Usually the team works in the early hours of the morning, painting
slogans on instruction by the station or painting out and mutilating the slogans
painted by communist or pro-communist groups. Extreme caution is taken by the
team in order to avoid street clashes with the opposition wall-painters who
sometimes roam the streets searching for the anti-communists who spoil their
work. John Bacon is also in charge of this operation.

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ECACTOR. The most important station operation for anticommunist
political action consists of funding and guidance to selected leaders of the
Conservative Party and the Social Christian Movement. The operation developed
from the most important station penetration agent of the Ponce government,
Renato Perez Drouet, J who was Secretary-General of the Administration under
Ponce and has since returned to manage his Quito travel agency Through Perez,
the station now finances the anti-communist propaganda and political action of
the Social Christian Movement, of which Perez is a leader.

Before the 1 960 election campaign Perez proposed to Noland the support of
a young engineer, Aurelio Davila Cajas, J ECACTOR- 1, whom Noland began to
cultivate. Davila intensified his activities in the Conservative Party and with
station financing he was elected in June to the Chamber of Deputies, representing
the distant and sparsely populated Amazonian province of Napo. Davila is now
the fastest rising young leader in the Conservative Party and very closely
associated with the Catholic Church hierarchy which the party represents in
politics. He is an outspoken and militant anti-communist and is considered by
Noland, moreover, to have an enlightened stance on social reform. The station is
now helping him to build up his personal political organization, which is
branching out into student politics at the Catholic university. Normal
communications between Noland and Davila, and the passage of funds, is
through Renato Perez. In emergencies, however, messages and money are passed
via Barbara Svegle, J the station secretary-typist, who rents an apartment in
Davila's apartment-building where the agent also lives.

Also through Renato Perez, Noland cultivated and eventually recruited
Rafael Arizaga, J ECACTOR-2, who is the principal leader of the Conservative
Party in Cuenca, Ecuador's third largest city. Through this agent Noland financed
Conservative Party-candidates in Cuenca including the agent's son, Carlos
Arizaga Vega, J ECACTOR-3, who was elected to the provincial council of
Azuay — the province of which Cuenca is capital. Communications with this
branch of the ECACTOR operation are difficult, but usually Noland travels to
Cuenca for meetings although the principal agent may go to Quito. Funds
channelled through this project are now being spent on anti-communist
propaganda, student politics at the University of Cuenca, and local militant
street-action by Conservative Party youth groups.

Another agent has recently been added in order to fulfil the project's goals in
Ecuador's fourth largest city, Ambato, another sierra provincial capital. The agent

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is Jorge Gortaire, J ECACTOR- 4, a retired Army colonel who has recently
returned from service on the Inter-American Defense Board in Washington.
Gortaire is on the list of pro-Ponce military officers now being purged. In 1956
he was elected as functional Senator for the Armed Forces, but he served only
part of his term before being assigned by Ponce to the Inter- American Defense
Board. In Washington he was cultivated by a CIA headquarters officer assigned
to spot and assess potential agent material in the delegations to the Defense
Board, and reports on Gortaire were forwarded to the Quito station. Noland has
initiated contact with Gortaire and the Ecuadorean desk is processing clearance
for use of this agent in anticommunist political action and propaganda in Ambato.
Special importance is attached to this new agent because the mayor of Ambato is
a Revolutionary Socialist and is using the municipal government machinery to
promote infiltration by the extreme left there. Gortaire has excellent potential
because he would be a likely candidate for Minister of Defence if Ponce is re-
elected in the next elections. Meanwhile he will also be reporting on any rumours
and reports of discontent in the military commands.

ECOPTIC. The socialists, it will be remembered, have split into two rival
groups: the Democratic Socialist Party of Ecuador (PSE) and the Revolutionary
Socialist Party (PSR). Through his work in the University Sport League which
sponsors one of the best Ecuadorean professional soccer teams, Noland met,
cultivated and finally recruited Manuel Naranjo, J ECOPTIC- 1, a principal
leader of the PSE. With financial support from Noland, Naranjo, an outstanding
economist, was elected to the Chamber of Deputies in June, representing
Pichincha (Quito) Province. Financial assistance is continuing so that this agent,
like the others, can build up a personal political organization and influence his
party to take desired action on issues such as communism and Castro, while
fighting the PSR.

ECBLOOM. Labour operations are perhaps the weakest part of the Quito
station operational programme, although considerable potential exists in
political-action agents such as Aurelio Davila and Manuel Naranjo. However,
because of Velasco's appeal to the working class and the poor, Noland has
continued to support a long-time agent in the Velasquista movement, Jose
Baquero de la Calle. J Baquero has presidential ambitions and is the leader of the
rightist wing of the Velasquista movement, closely identified with the Catholic

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Church hierarchy. He is now Velasco's Minister of Labour and Social Welfare,
and Noland hopes that non-communist labour organizations can be strengthened
through his aid. His close identification with the Church, however, is restricting
his potential for labour operations to the Church-controlled Catholic Labor
Center J (CEDOC) which is a small, artisan-oriented organization. Noland pays
Baquero a salary and expense money for his own political organization and for
intelligence on the government and Velasquista politics.

ECORT. Student operations are run for the most part from the Guayaquil
base. However, the Quito station finances and directs the most important
Ecuadorean anti- communist student newspaper, Voz Universitaria. % The agent in
this operation is Wilson Almeida, % ECORT- 1, who is the editor of the
newspaper. Almeida gives the publication a liberal orientation because the
Catholic student movement is supported through Renato Perez, of the Social
Christian Movement and Aurelio Davila of the Conservative Party. Propaganda
against the Cuban Revolution and against communist penetration in the HUE
(university students federation) is the main function of the ECORT newspaper.

The following are the main operations of the Guayaquil base:

Fl-CI Operations

ECHINOCARUS. There are already increasing signs of a policy split in the
Communist Party of Ecuador (PCE) over the problem of revolutionary violence
v. the peaceful road to socialism. The PCE leadership grouped around Pedro
Saad, the Secretary- General, generally favour the long struggle of preparing the
masses, while the sierra leaders grouped around Rafael Echeverria Flores, leader
of the Pichincha Provincial Committee, tend towards early initiation of guerrilla
action and terrorism. Thus the communists themselves are beginning to split
along sierra-coast lines, and the Guayaquil base is charged with monitoring the
Saad group.

The best of several base penetration agents is ECHINOCARUS- 1 J whose
access is superior to cell-level, but far from the secrets of Saad's Executive
Committee. The Guayaquil base is hoping to snare a really first-class penetration
agent, or mount a productive technical penetration, on the basis of a new
targeting study now underway.

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ECLAT. The counterpart to the ECJACK surveillance and investigative team
in Quito is the ECLAT operation in Guayaquil. This is a team of five agents who
have access to government identification and police files. The team is directed by
an ex-Army officer who also reports information picked up among his former
colleagues in the coastal military garrisons. As in Quito, the investigative team in
Guayaquil keeps the LYNX contingency list current for quick action against the
most important-activists of the extreme left.

ECAXLE. The main political intelligence collected by the base is through Al
Reed, } an American who has spent a large part of his life in Guayaquil. He
inherited a family business there, which has been doing rather badly, but he
manages to keep close relations going with a variety of business, professional
and political leaders.

Guayaquil PP Operations

ECCALICO. What the base lacks in intelligence collection is made up in
labour and student operations. ECCALICO is the labour operation through which
the base formed an organization to defeat Pedro Saad in the coast election of a
Functional Senator for Labour earlier this year. The same organization forms the
nucleus for a new coastal labour confederation that will soon be launched.

The principal agent in the operation is Emilio Estrada Icaza, J the general
manager of one of the country's largest banks. The main sub-agents are Adalberto
Miranda Giron, J a leader of the Guayas Provincial Federation of Employees
(white-collar workers) and the base candidate who defeated Saad; Victor
Contreras Zuniga, % anti- communist Guayaquil labour leader; and Enrique
Amador Marquez, J also an anti- communist labour leader. Through Estrada the
base financed Miranda's electoral campaign, which mainly consisted of the
forming and registering of new, anti- communist unions in the coastal provinces,
mostly in Guayas (Guayaquil). The election was based on a point system
weighted according to the numbers of workers in the unions recognized by the
electoral court. Although the new unions registered through the operation were
really only company social clubs, for the most part, and were generally
encouraged by management as a result of the prestigious but discreet support
from Estrada, the protests from the CTE and other communist- influenced labour
groups were disallowed by the electoral court. On the contrary, just before the

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election the electoral court disqualified some fifteen pro-Saad unions following
protests from the ECCALICO agents. The balance swung in favour of Miranda,
and he was elected. Blair Moffet, J the Guayaquil Base Chief, received a
commendation from headquarters on this operation, which eliminated the PCE
Secretary-General from a Senate seat he had held since the 1940s.

The base plan now is to follow through with the formation of a new coastal
labour confederation using the same unions, agents and cover as in the election.
The CIA labour programmes and the ORIT labour representative will also be
used, as they were in the electoral campaign, although they are not in direct
contact with the base. The long-range strategy in labour operations, obviously, is
to weaken the communist and revolutionary socialist-dominated CTE while
establishing and strengthening the station and base-controlled democratic union
structure.

ECLOSE. Student election operations for control of the Ecuadorean
Federation of University Students (FEUE) are run by the Guayaquil base through
Alberto Alarcon, J ECLOSE, who is a businessman active in the Liberal Party. At
different times each year, the five Ecuadorean universities elect new FEUE
officers. An annual convention is also held when the national seat of FEUE goes
in rotation from one university to another. Alarcon manages teams of agents at
these electoral conventions, who are armed with anti-communist propaganda and
ample funds for purchasing votes and other activities designed to swing the
elections away from the communist and pro-communist candidates. Through this
operation national control of the FEUE has been kept out of communist hands for
several years, although communist influence is still very strong nationally and at
several of the local FEUE chapters. Nevertheless, efforts to have the FEUE pull
out of the communist International Union of Students in Prague, and to affiliate
with the CIA-controlled COSEC J in Leyden, have been unsuccessful.

Washington DC November 1960

Tension and crisis prevail in the most important breakthrough in operations
against the Cubans in Quito. In October the Cuban Embassy chauffeur, a
communist, offered his services to the Embassy through an intermediary and was
immediately picked up by the station. His motivation is entirely mercenary but
his reporting so far has been accurate. His access is limited, of course, but he will

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be an extremely valuable source for information about the Cuban diplomats
which we can use in trying to recruit some of them.

The problem is that the agent, ECALIBY-1, J missed a meeting several
weeks ago and has also failed to appear for later alternative meetings. Blair
Moffet, the former Guayaquil Base Chief who has gone temporarily to Quito
until I arrive, is handling the case and has even checked at the agent's home.
Nobody there knew anything of his recent movements. Moffet is afraid the
chauffeur is in some kind of trouble because the ECJACK surveillance team has
reported that he hasn't been showing up at the Embassy. For the time being
Moffet will continue to work the alternative meeting-sites with extreme caution
against a possible Cuban provocation.

The station's campaign to promote a break in diplomatic relations between
Ecuador and Cuba is stalled because Manuel Araujo, the Minister of Government
and an admirer of the Cuban revolution, is the principal leader of Velasco's
programme to denigrate the Ponce administration and to purge the government of
Ponce's supporters. Araujo's campaign has been fairly effective, at least enough
to keep our Conservative and Social Christian political-action agents, on whom
we must rely for increasing pressure for the diplomatic break, on the defensive.
Araujo has also been effective in his public campaign to equate support to the
government with patriotism because of increasing tension over the Rio Protocol
and the Peruvian boundary issue.

Last month, for example, Araujo accused the Conservative Youth
Organization, through which Aurelio Davila carries out station political-action
programmes, of treason because it called on the Conservative Party to declare
formal opposition to Velasco. Araujo was then called to the Chamber of Deputies
by Conservatives to answer charges that he had violated the Constitution with his
remarks about treason. The session lasted from 10 p.m. until 5 a.m. the next
morning. Araujo, cheered on by the screaming Velasquista galleries which
shouted down the Social Christians and Conservatives, turned the session into
another denunciation of corruption in the Ponce administration. He even accused
the forty-eight purged military officers of treason. Because of the deafening roar
from the galleries' wild cheering for Araujo, the Conservative, Social Christian,
Liberal and Socialist deputies who had planned to question him were forced to
leave the session.

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Araujo's new accusation of treason caused a big ripple in the military
services, and the Minister of Defense and Velasco himself followed with denials
that any of the officers were guilty of treason.

Since those events of early October the Velasquistas have continued to equate
patriotism on the Peruvian question with support for the government. Thousands
turned out on 18 October in Guayaquil for a street demonstration to support
Velasco and Araujo, and a similar mass demonstration was held in Quito the
following day. On 20 October, the FEUE sponsored what was described as the
most massive demonstration in the history of Quito. Students, government
workers and people from all walks of life joined in the march and rally at a Quito
soccer stadium where Velasco and others denounced the Rio Protocol.

Early in November, Araujo was called again before the Congress to answer
questions. He made the trip from his Ministry to the Legislative Palace riding a
decrepit old horse that he claimed had been sold by Ponce's Minister of the
Interior (a Social Christian and close station collaborator) to the National Police
for 30,000 sucres — about 2500 dollars. He said the former Minister had made his
brother appear as the seller and that the useless nag ought to be embalmed and
placed in a museum as a monument to the Ponce Administration.

During the ride from the Ministry to the Congress Araujo picked up a large
crowd of followers — the spectacle of this physically deformed man less than five
feet tall with a Van Dyke beard ridiculing the Poncista elite was just the sort of
conduct that makes him so popular with the poor masses. The Velasquistas again
packed the galleries to cheer Araujo wildly during his interpellation while
shouting down any attempts by Conservatives or Social Christian legislators to
criticize him. Later the same day a group of Velasquistas attacked a
demonstration by a Conservative student group, and the police — controlled by
Araujo as Minister of Government — first attacked the students and later
persuaded the Velasquista mob to disperse.

The day after the 'horse parade' Araujo nearly uncovered our EC JOB
propaganda distribution team. Four of the team were distributing a fly-sheet
against communism and Castro when by chance they were seen by Araujo
himself. Araujo personally made the arrests, and our agents were charged with
distributing flysheets without a print-shop symbol — the ECELDER print shop
had erred in failing to use one of its fictitious symbols that take longer to trace.
The distribution team leader couldn't buy their release this time so Noland had to
get Aurelio Davila to use his Congressional leverage to get them out.

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The station started a campaign to get Araujo thrown out, but it is progressing
slowly. Through Davila a fly-sheet was circulated calling Araujo a communist
because of his support for the Cuban revolution, but Velasquista agents like
Baquero, the Minister of Labour, and Reinaldo Varea, J Vice-President of the
Senate, haven't been able to shake President Velasco's confidence in Araujo. The
campaign is difficult because it's bound together with the political battle of
Velasco against the Conservatives and Social Christians — almost negating the
effectiveness of our Velasquista agents against Araujo. Care is being taken, in the
campaign through the rightist political agents like Davila, to focus on identifying
Araujo with communism and to avoid criticizing Velasco himself.

Our forces came off second best just a few days ago, however, when the
Social Christians sponsored a wreath-laying ceremony in commemoration of the
death of a student killed during Velasco's previous administration when police
invaded a school to throw out strikers. During the days before the ceremony,
which was planned to include a silent march, Araujo's sub-secretary denounced
the ceremony as a provocation designed to cause a clash between Catholic
students and the government. When the march arrived at the Independence Plaza
in front of the Presidential Palace, groups of Velasquistas attacked with clubs and
rocks. The marchers were forced out of the Plaza, and their floral offering left at
the Independence Monument was destroyed. The Velasquista mob, now in
control of the Plaza, cheered Velasco wildly when he returned to the Palace after
a speech in another part of town. Numerous clashes followed during the
afternoon and evening as the Velasquista mobs roamed the streets attacking the
remnants of the Social Christian march which was also repressed by police
cavalry. The government, however, clearly prefers to use its political supporters
rather than the police to suppress opposition demonstrations, and the same tactics
used in the Congress are now proving their worth in the streets.

As if all this weren't bad enough, Araujo just expelled one of our labour
agents: John Snyder, J the Inter- American Representative of the Post, Telegraph
and Telephone Workers International J (PTTI) who for two years has been
organizing Ecuadorean communications workers. Araujo accused him of
planning a strike to occur just before the Inter- American Conference, but the real
reason was a CTE request for Snyder's expulsion because he was so effective.
Jose Baquero de la Calle, J our Minister of Labor, could do nothing to help — he
just doesn't carry the weight with Velasco that Araujo carries.

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The campaign against Araujo has been hampered by the crisis atmosphere
over the boundary problem with Peru. In September Velasco sent his Foreign
Minister to the UN General Assembly where he repeated the denunciation of the
Rio Protocol because it was signed while Peruvian troops still occupied parts of
Ecuador. The Minister added that Ecuador would raise the issue at the Inter-
American Conference. Peru countered by calling for a meeting of the Guarantor
Powers and threatening not to attend the Conference. The Guarantor Powers,
including the US delegation, met in Rio de Janeiro in October but no public
statement was issued. However, State Department documents at the Ecuador desk
reveal that the Guarantors voted to disallow Ecuador's unilateral abrogation of
the Protocol, but they followed with private appeals to both countries for a
peaceful settlement. In early December, nevertheless, a public statement is going
to be issued rejecting Velasco's position. The reaction in Ecuador will be strong —
in Guayaquil in September our Consulate and the Peruvian Consulate were
stoned because of the Rio Protocol.

The station has received isolated reports that Velasco might turn to the
Soviets or Cubans for support when he sees that the boundary issue is going
against him. Moreover, the Minister of Education is suspected of having opened
negotiations for an arms purchase during his recent trip to Czechoslovakia,
although the announced purpose of the trip was for the purchase of technical
equipment for Ecuadorean schools.

In Ecuador the Congressional sessions are set by the Constitution from 10
August until 7 October, but extension for up to thirty days is possible. This year's
Congress voted the extended session, but in the battling between rightists and
Velasquistas there was no significant legislation on any reforms, particularly
agrarian reform, which had been one of the central promises of the Velasquista
campaign. On the other hand repeal of the Civil Service Career Law set
administrative reform back a few years. Worse still, the Congress in secret
session just before going into recess, voted a 50 per cent increase in its own
salaries retroactive to the opening of the session in August. The new amount is
equivalent to 25 dollars per day — by Ecuadorean standards rather generous
considering that two thirds of the population have a family income of only 10
dollars per month.

During the final two weeks before I was appointed to the Foreign Service I
had to take a special course in labour operations. Although the course was
supposed to be for mid-career labour operations specialists, the WH Division

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training officer told me I was needed to fill a quota while he assured me that I
wouldn't have to run labour operations just because the course is on my record.

Nominally the course was under the Office of Training, but the people who
really run it are from 10/4 (Branch 4, labour, of the International Organizations
Division). The course was dominated by bickering between the 10 officers and
the area division case officers over use of the labour agents controlled by 10
Division under Cord Meyer. J Officers from WH Division were practically
unanimous in condemning ORIT J which is the regional organization for the
Western Hemisphere of the International Confederation of Free Trade Unions. J
They said ORIT is hopeless, discredited and completely ineffective for attracting
non-communist labour organizations in Latin America. Agency leaders (at the
apparent urging of George Meany J and Serafmo Romualdi J) are convinced,
however, that ORIT can be salvaged, and so WH Division must try to help.

Much emphasis was given to the advantages of using agents in the different
International Trade Secretariats in which, in Latin America at least, the Agency
has considerable control. Lloyd Haskins, J Executive Secretary of the
International Federation of Petroleum and Chemical Workers, } gave us a lecture
on how he can help in organizing Latin American workers in the critical
petroleum industry. Also having interesting possibilities for Latin America is the
International Federation of Plantation, Agricultural and Allied Workers J
(IFPAAW) which was founded last year to carry on the rural organizing begun
several years ago through the ICFTU Special Plantation Committee which had
special success in Malaya. In Latin America we use this union in a similar way to
deny the peasant base of guerrilla movements through the organization and
support of peasant unions within the larger area of agrarian reform and
development of cooperatives. Overall, the course emphasized that Agency labour
operations must seek to develop trade unions in underdeveloped countries that
will focus on economic issues and stay away from politics and the ideology of
class struggle. This is the Gompers tradition of American trade-unionism which,
when promoted in poor countries, should raise labour costs and thereby diminish
the effect that imports from low-cost labour areas has on employment in the US.

After the labour course I took the two-week orientation course at the State
Department's Foreign Service Institute. Although the course was generally
boring, and I only took it because of cover requirements, it got me thinking about
the place Agency operations occupy within the larger context of US foreign
policy towards Latin America. There seem to be two main programmes that the

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Latin American governments must promote: first, economic growth through
industrialization; and second, economic, social and administrative reforms so that
gross injustice can be eliminated.

For economic growth they need capital, technology and political stability US
government programmes are helping with these needs, particularly since Vice-
President Nixon's trip two years ago: the Inter-American Development Bank was
founded last year, Export-Import Bank financing is being increased, the technical
assistance programmes of ICA are being expanded, and now the Social Progress
Trust Fund is to be established with 500 million dollars from the US for health,
housing, education and similar projects. From Kennedy's speeches on Latin
America, some people conclude that these programmes will be expanded still
more when he becomes President.

CIA operations are crucial to the economic growth and political stability
programmes, because of the inevitable capital flight and low private investment
whenever communism becomes a threat. The Cuban revolution has stirred up and
encouraged the forces of instability all over the hemisphere and it's our job to put
them down. CIA operations promote stability through assisting local
governments to build up their security forces — particularly the police but also the
military — and by putting down the extreme left. That, in a nutshell, is what we're
doing: building up the security forces and suppressing, weakening, destroying,
the extreme left. Through these programmes we buy time for friendly
governments to effect the reforms that will eliminate the injustices on which
communism thrives.

The Cuban Revolution has swung to the far left, the State Department, and
American businesses, are fearful that Cuba will try to export its revolution to
other countries in the hemisphere, which might result in nationalization of
holdings. The top priority of the United States in Latin America is to seal off
Cuba from the continent. In Quito, our orders are to do everything possible to
force Ecuador to break diplomatic and economic relations with Cuba, and also to
weaken the Communist Party there, no matter what the cost.

For weeks Janet and I have been getting shots, for every known disease, I
think, and she's been attending sessions on Foreign Service protocol and on
what's expected of an embassy wife. Bob Weatherwax has been telling us a lot
about housing and the life there. It sounds just too fantastic. He brought a
Christmas shopping list from the Noland family and we're sending all their gifts
down with our air freight. It won't be long now.

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Today I made my last stop in the division on final check-out. It was in the
Records Branch for assignment of pseudonym — the secret name that I'll use for
the next thirty years on every piece of internal Agency correspondence:
dispatches, cables, reports, everything I write. It will be the name by which I'll be
known in promotions, fitness reports and other personnel actions. I signed the
forms, acknowledging with my true name that in secret employment with the
CIA I will use the assigned official pseudonym. Then I read the name — how can I
miss with JEREMY S. HODAPP?

Quito, Ecuador 6 December 1960

Finally here. Out plodding DC-7 took over ten hours to get to Quito,
including stops in Panama and Cali, but Janet and I were in the first-class section
thanks to government policy allowing the extra expense for long flights. Former
Ecuadorean President Galo Plaza, the Liberal Party leader who lost to Velasco
this year, was sitting behind us and it would have been interesting to talk to him,
but I was afraid it might seem presumptuous.

The weather was clear and sunny as we approached Quito, and through the
windows of the aircraft we could see snowcapped volcanos and green valleys that
extended up the sides of mountains to what seemed like almost vertical
cultivations. I wonder how they plough at such an angle. Everyone's heard of the
Andes mountains but actually to see this breathtaking scenery is almost
overwhelming.

At the Quito air terminal, an ultra-modern building just completed for the
Inter-American Conference, we were welcomed by Blair Moffet who gave us the
Embassy orientation folder, mostly pointers on Ecuadorean health hazards. Then
he dropped us at a small hotel in a residential section less than a block from the
Embassy itself. A little while later Noland came to greet us with a pleasant
surprise; he had tickets for us to see the bullfight this afternoon with his wife and
some of their friends.

Today is Quito's most important annual festival: the celebration of the city's
liberation from Spanish rule. The festivities have been going on for some days
with bullfights, parades and livestock shows. I'm not sure I liked the bullfight. It
was exciting all right, and the music and oles were stirring, but if Paco Camino is
really one of the world's best I wonder what second-raters are like. He practically
butchered that bull trying to get him to fall.

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Afterwards we went to a party with the Nolands at the home of the family
that controls the movie theatres. Everyone there seemed to be related by blood or
marriage, almost, and among the guests was Jorge Acosta, } Velasco's nephew
and one of the station's best friends in the government. He runs the National
Planning Board, not a terribly powerful job, but as President Velasco's family
favourite he is not far from decision-making. Just recently Acosta advised that
Weatherwax, our officer under Public Safety cover, can now return without
danger.

Tension on the political scene has increased,' if anything, in the past week.
On 1 December the Quito Municipal Government, which is under Liberal Party
control, began its new sessions. There was serious rioting between Liberal and
Velasquista mobs, and when Araujo's police intervened they threw their first
teargas grenade at the Liberal Mayor.

Tomorrow the Guarantor Powers will release their decision denying
Ecuador's claim that the Rio Protocol is void. Noland doesn't think the
announcement will be taken calmly.

Quito 8 December 1960

They say it takes a while to get used to this 9000-feet-plus altitude. The air is
thin and I seem to be unusually sleepy, but neither of us has had any sign of the
terrible headaches some people get. The nights are cool, and there is quite a
difference between being in the shade and the sunshine, but because it is so dry
here, people wear woollen clothing even on hot days. The nicest thing about
Quito, so far, are the flowers. It seems just like springtime, in fact, and someone
told me that here there are only two seasons, wet and dry, but flowers all year. As
soon as we can we're going to visit the monument north of town where the
equator passes. It's about a half-hour drive and you can take photographs with
one foot in the northern hemisphere and one in the southern.

Noland says he wants me to take over the operations that Blair Moffet has
been running so that he can return to Washington. But Blair said he can't return
until he finds out what happened to the Cuban Embassy chauffeur.

The announcement on the Rio Protocol was a bitter blow in the face of all the
recent civic demonstrations and new hopes fomented by Velasco since he took
office. A really big demonstration is being organized for tomorrow at the
Independence Plaza.

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Quito 9 December 1960

Emotions have overflowed. Today, my fourth day in Quito, I saw my first
mob attacks against a US Embassy I was late leaving the hotel and the manager
warned me that rioters had already been stoning the Embassy When I arrived
only a small group was still chanting in front, but I entered at the rear and saw
that many windows were broken during the earlier raids.

Throughout the day the station telephones were ringing as agents called to
report the movements of the URJE-led rioters who returned to attack the
Embassy a number of times. Araujo kept the police away, so the mobs could
operate almost at will. I watched from the station offices on the top floor. Their
favourite chant, as they hurled their stones, was: 'Cuba, Russia, Ecuador'. The
Ecuadorean-North American Cultural Institute which is run by USIS and the
Peruvian Embassy were also attacked, as was our Consulate in Guayaquil.

While the Embassy was being attacked almost all the Quito buses suspended
service and gathered north of town where they began a caravan into
Independence Plaza picking up loads of people along the way. The Plaza was
jammed with thousands when the speeches began, which included attacks on the
Rio Protocol by Velasco and his Foreign Minister. Araujo, for his part, called for
diplomatic relations with the Soviets if that were necessary for Ecuador to attain
justice. The crowd chanted frequent denunciations of the Guarantor Powers and
the OAS. Later the Foreign Minister announced that two Czech diplomats will be
arriving shortly to open the Czech Legation here.

Quito 14 December 1960

Attacks against the Embassy have continued but they now seem smaller and
more sporadic. Police protection has been improved and there were even some
Army units sent to the Embassy. Araujo was forced to send the police protection
back by cooler heads in the government like Acosta. The riots spread to other
cities, too, where bi-national cultural centres were attacked. More public
demonstrations have been held, the largest of which was yesterday when a
'March of Justice' brought thousands again to the Independence Plaza. URJE
continues to be the most important force behind the attacks although the marches
and demonstrations are sponsored by a variety of organizations and are inspired
mostly from civic motives.

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Two important labour organizations have just been formed but for the time
being only one is ours. In Guayaquil the ECCALICO agents who ran Miranda's J
campaign to defeat the PCE General Secretary, Saad, as Functional Senator for
Labour, held a convention on 9-11 December and formed the Regional
Confederation of Ecuadorean Coastal Trade Unions } (CROCLE) as a permanent
mechanism to fight the CTE on the coast, mainly in Guayas Province. Both of the
principal-action agents, Victor Contreras } and Enrique Amador } are on the
Executive Committee, Contreras as President. The ORIT representative was very
helpful, especially in providing unwitting cover for our agents. The plan now is
to affiliate CROCLE with the ORIT-ICFTU structure in place of the current
Ecuadorean affiliate, the small and ineffective Guayas Workers Confederation
(COG) which our Guayaquil base had been supporting.

In Quito the USOM labour division, whose main work consists of giving
courses in free trade-unionism throughout the country, has taken the first step
towards the formation of a national, noncommunist trade-union confederation.
Under their direction during the first week this month the Coordinating
Committee of Free Trade Unionists of Ecuador was established. This committee
will soon begin establishing provincial coordinating committees which will
develop into provincial federations. Eventually a national confederation will be
established. The station plan is to let USOM direct these early stages and later,
after the new Deputy Chief of Station arrives, we will probably move in on the
formation of the national confederation. For the moment, getting Miranda in the
Senate and forming CROCLE are as much as we can manage.

Bill Doherty, J the Inter-American Representative of the PTTI, J and another
of 10 Division's international labour agents, arrived a few days ago to pick up the
pieces from John Snyder's J expulsion. He's trying to arrange for continued PTTI
support to the communications workers' union, FENETEL, } in organization,
training and housing, but Araujo's hostility hasn't changed. Noland is reluctant to
show our connections with Doherty to Baquero de la Calle, the Minister of
Labor, by insisting on special treatment, but even if he tried, Baquero probably
couldn't outmanoeuvre Araujo.

Guayaquil student operations have also had a big success. The FEUE
National Congress was held in Portoviejo earlier this month, and the ECLOSE
forces under Alberto Alarcon J finally attained a long-sought goal. The Congress
adopted a new system for electing officers of the various FEUE chapters. From
now on the elections will be direct, obligatory and universal as opposed to the old

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indirect system that gave the communist and other leftist minorities a distinct
advantage. The national seat for the coming year will be Quito where FEUE
leadership is in moderate hands.

I've met Ambassador Bernbaum — he arrived only a few weeks before I did
and this is his first post as Ambassador. He is a career Foreign Service man and
not very colourful. Noland said he knows nothing about our operations, not even
the political-action operations, and doesn't want to. Today the Ambassador visited
Velasco with a message from Kennedy, and he took advantage of the visit to
announce that loans for certain public works and development projects have been
approved in principle by US lending institutions. The announcement is supposed
to assuage anti-US sentiment.

Press reports have alleged that several governments are seeking a
postponement or change of site for the Inter-American Conference, partly
because of the riots, and the Cuban press and radio are suggesting that Ecuador
may follow Cuba in repudiating the Inter- American System.

Quito 15 December 1960

Aurelio Davila, J one of the main political-action agents of the ECACTOR
project, won an important and clever victory today. He was behind a mass
demonstration of support to Velasco's policy on the Rio Protocol which backfired
on Araujo. Students from all the Catholic schools and the Catholic university
marched to Independence Plaza where they chanted slogans against communism.
Velasco was on the platform and the Minister of Defense had begun to speak
when a small group of counter-demonstrators began chanting 'Cuba, Russia,
Ecuador', which prompted a flurry of down with communism' from the mass of
students.

Araujo, who was also on the speaker's platform, descended to join the
counter-demonstrators. Almost immediately a riot began and Velasco had to grab
the microphone and ask for calm. The speeches continued, including one by
Velasco, but the President was clearly annoyed at Araujo's having disrupted this
huge demonstration of support.

At the instigation of Davila and other Conservative Party leaders the Cardinal
issued a pastoral letter which was released today. The Cardinal, whose influence
is at least equal to that of any politician including Velasco, warns that religion
and the fatherland are in grave and imminent danger from communism, adding

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that Ecuador should not move towards Cuba and Russia in search of support on
the boundary issue.

Tonight another demonstration of support for Velasco's Peruvian policy was
held — but it was by a leftist organization called the Popular Revolutionary
Liberal Party (PLPR) which is an offshoot of the youth wing of the Liberal Party
but with many Velasquista supporters. The speakers included Araujo and Gonzalo
Villalba, a Vice-President of the CTE and one of the leaders of the Communist
Party in Quito. They called for diplomatic and commercial relations with the
Soviets while condemning the US and conservatives.

Quito 16 December 1960

Araujo's out! Late this afternoon it was announced at the Presidential Palace
that Araujo's resignation had been accepted, but we had been receiving reports all
day that Velasco was getting rid of him. We have poured out a steady stream of
propaganda against him for some weeks and his behaviour at yesterday's
demonstration clinched matters. The Foreign Minister, who is a good friend of
the US, has also been working to get Araujo fired, and of course Araujo's own
identification with the extreme left gave him little room to manoeuvre.

Since Araujo's resignation was announced, street clashes have been
continuous between his supporters, mostly from the URJE, and anti-Araujo
Velasquistas. Right now the downtown area is full of tear-gas but we learn from
several agents that the rioters are finally dispersing.

Quito 22 December 1960

Civic demonstrations on the Peruvian question have continued but they have
lost their anti-US flavour. In fact they have almost been replaced by a campaign
by Catholic groups to show support for the Cardinal in response to an attack
against his pastoral letter on communism, made by the Revolutionary Socialist
Labor Senator. Aurelio Davila is leading the campaign, funded from the
EC ACTOR project, which includes letters and signatures published in the
newspapers by Catholic organizations like CEDOC, the labour confederation,
and the National Catholic Action Board, of which Davila is a Vice-President.

Today the campaign reached a peak with a demonstration by thousands who
marched through the Quito streets in the rain chanting slogans against Cuba,

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communism and Russia. The Cardinal himself was the main speaker and he
repeated his warning in the pastoral letter of the imminent danger of communism.
He's almost ninety years old, but he's really effective.

I've taken over my first operations and met my first real-live agents — at last
I'm a genuine clandestine operations officer.

The first operation I took over was ECJACK, the surveillance and general
investigations team run by Lieutenant-Colonel Paredes. Blair took me out to meet
him a couple of days ago, and through him I'm continuing to keep a watch near
the Cuban Embassy for any signs of the missing chauffeur. With this operation I
also took over the secret-writing correspondence with the agents in Cuba, and
I've proposed to headquarters that we could save time if a trainer were sent to
teach me to write and develop the letters. That way we could cable the messages
and save the time required to pouch the SW letters. In a few days Noland will
introduce me to Francine Jacome, J who writes the cover letters.

Blair also turned over the ECFONE operation to me. The principal agent,
Oswaldo Chiriboga, J was appointed Ecuadorean Charge d'Affaires to Holland
and The Hague station is going to use him against Soviet and satellite diplomats.
We had to get a new cutout to Basantes,; the Communist Party penetration agent,
and Noland chose Velasco's physician, Dr Ovalle, J in order to sustain the cover
story used from the beginning on this operation. Dr Ovalle will advise by
telephone when he gets reports from Basantes, and I'll go to his office to get
them. This operation took on even greater significance in October when Basantes
was elected to the Pichincha Provincial Committee. With the schism growing
between the PCE coastal and sierra leadership this is equivalent to having an
agent on the local executive committee.

The station seems to have turned into a Santa Claus operation these last few
days. At Noland's house all the wives with their servants have been wrapping
bonbons, cartons of cigarettes, boxes of cigars, bottles of whiskey, cognac,
champagne and wine — and dozens of golf-balls. These are operational Christmas
gifts to agents and to 'contacts' — (friends who might eventually be useful agents).

Most officers in CIA stations are expected to develop personal relationships
with as wide a variety of local leaders as possible, whether in business,
education, professions or politics. State Department cover in WH Division
facilitates the cultivation of these 'contacts' while station funds for entertainment,
club dues, gifts and supplements to the regular housing allowances give us
considerable advantages over our State Department colleagues.

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Noland is clearly a great hit with the Ecuadoreans. He seems to know
everyone in town who counts. He's a former college football star and coach with
lots of personal charm and energy His wife is the national women's golf
champion and an ex-Captain in the WAC'S. Together they are the most effective
couple in the Embassy and are lionized by the local community Mostly they've
developed these' contacts' through Noland's political and sports work and the
very active role both have at the Quito Tennis and Golf Club.

Quito 30 December 1960

There seems now to be little doubt that the Inter-American Conference will
be postponed. Peru insists it won't attend because of Ecuador's intention of
raising the Protocol issue; Venezuela and the Dominican Republic are still in a
crisis over Trujillo's attempt to assassinate Betancourt; and US-Cuban relations
are getting still worse. We all know the invasion is coming but certainly not I
until Kennedy takes over.

Peru's break in relations with Cuba today hasn't helped prospects for the
Conference. The break is partly a show of appreciation to the US for the October
ruling by the Guarantors on the Protocol, but it's also the result of a Lima station
operation in November. The operation was a commando raid by Cuban exiles
against the Cuban Embassy in Lima which included the capture of documents.
The Lima station inserted among the authentic documents several that had been
forged by TSD including a supposed list of persons in Peru who received
payments from the Cuban Embassy totalling about 15,000 dollars monthly.

Another of the forged documents referred to a non-existent campaign of the
Cuban Embassy in Lima to promote the Ecuadorean position on the Rio Protocol.
Because not many Peruvians believed the documents to be genuine, the Lima
station had great difficulty in getting them publicized. However, a few days ago a
Conservative deputy in the Peruvian Congress presented them for the record and
yesterday they finally surfaced in the Lima press. Although the Cubans have
protested that the documents are apocryphal, a recent defector from the Cuban
Embassy in Lima — present during the raid and now working for the Agency —
has 'confirmed' that the TSD documents are genuine. The Conservative Peruvian
government then used the documents as the pretext for breaking relations with
Cuba. We could do something similar here but Velasco probably wouldn't take

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action. He wants Cuban support against Peru on the Protocol issue, if he can get
it.

The disappearance of the Cuban Embassy chauffeur is now solved. He tried
to impress the Embassy gardener by telling him about working for us. The
gardener told one of the Cubans and the chauffeur was fired. He panicked and
has been hiding out in a provincial village, convinced that the Cubans will try to
kill him.

He came into the Embassy yesterday and Blair met him. There's no saving
the operation but Blair gave him a modest sum to get him back to the village and
help him for a little while. Noland is really angry with Blair because he thinks
Blair didn't take enough pains teaching the agent good security. Too bad — I was
hoping I might get this operation too. Blair returns to Washington now.

Quito 4 January 1961

The Inter- American Conference will definitely be postponed now that the US
has broken relations with Cuba. All cables and correspondence formerly sent to
the Havana station are now to be sent to the JMWAVE station in Miami. I
suppose the Conference won't be held until after the JMARC invasion by the
exiles. Holding it after the Cuban revolution is wiped out will change the security
situation here. For one thing we won't have the Cuban Embassy's support to
URJE to worry about, and all these would-be protesters and agitators may not be
so enthusiastic.

Two Czech diplomats have just arrived to open a Legation. Headquarters had
traces on only one of them who is a suspect intelligence officer. At headquarters'
request we will watch closely, through agents like the Oldsmobile dealer,
Kladensky, for indications on the permanent building they intend to buy or rent.
Before their expulsion in 1957 we had their code -room bugged and headquarters
wants to try again.

Weatherwax, our Public Safety officer, is back and through him we hope to
improve intelligence collection in rural areas, which is now almost nil.
Contraband operations complicate the problem. Some areas, particularly those
from just north of Quito to the Colombian border, live from the contraband
traffic, and rural security forces, if they're not in the pay of the contraband rings,
are often engaged in small wars against them. The weakness of rural security
forces is practically an invitation to guerrilla operations, so we hope to strengthen

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them through the Public Safety Mission and get some rural intelligence collection
going at the same time.

Quito 29 January 1961

Today is the anniversary of the signing of the Rio Protocol and we thought
we might get some attacks on the Embassy The only violence, however, was
among the Ecuadoreans. In Guayaquil the Minister of Foreign Relations gave a
speech on the boundary problem and in a procession afterwards to Guayaquil
University he was jeered and booed as a traitor. Araujo and his friends in URJE
are determined to get the minister fired because he was one of the forces behind
Araujo's expulsion and he's also a good friend of the US. The campaign against
him is based on his having been a member of the Ecuadorean commission that
signed the Protocol in 1942.

I've taken over the ECSTACY letter intercept from John Bacon. He has been
using old-fashioned techniques that took a lot of time so I asked for a TSD
photographic technician to come and overhaul the station darkroom where I have
to process the letters. The TSD photographic and SW technicians have now both
finished their work. The darkroom looks brand new. Everything's in order and the
technician will send some new equipment in coming weeks. An SW technician
has also come to train me to write and develop the messages to and from the
agents in Cuba, and she left a supply of developer and ink pills. Now the Miami
base will cable messages for me to send and I'll cable the incoming messages
after development.

Quito 1 February 1961

Velasco's low tolerance of opposition is about to touch off another crisis. Two
days ago at the opening ceremony of the National Medical Association
Convention he, exchanged angry words with the Liberal Quito Mayor. Then
yesterday, at the inauguration of a new fertilizer plant where both were present
Velasquistas hissed and booed the Mayor and threw tomatoes at him, forcing him
to leave the ceremony. Last night supporters of both Velasco and the Mayor held
street demonstrations and the Minister of Government is making threats against
people who disturb public order — not to be mistaken for the Velasquistas, of
course.

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Today the Minister of Government closed a Quito radio station under an
administrative pretext (failure to renew its licence on time) following an opinion
programme in which listeners were encouraged to call and participate in the
programme by expressing their support for the Mayor. The Minister himself
called the radio station during the programme and his threats against the station
were broadcast as part of the programme. Later he closed the station. More
Velasquista street demonstrations tonight.

Quito 8 February 1961

There has been a serious uprising at a large hacienda in Chimborazo
Province south of here. Some 2000 Indians turned against the hacienda owner
and the local authorities. Three policemen were injured, the Army was called out,
two Indians were killed and over sixty arrested. The leaders of the Indians were
organizers from the Campesino Commission of the CTE, and the Revolutionary
Socialist Labor Senator (also a CTE leader) has started a campaign for the
Indians' release.

The Indians' grievances were legitimate enough — they often are badly treated
on these enormous estates. In this case the owner hadn't paid them since last year
and wasn't keeping accounts of their daily work. The CTE is also demanding an
investigation into alleged torture of the Indians who were arrested, and
recognition of their demands: wages, housing and schools.

Several people have told me that this is the type of incident that chills the
blood of the landowners here. If only one of these risings got out of hand and
began to spread there would be no telling where it would end. Probably right in
the Presidential Palace.

Quito 15 February 1961

Our new Deputy Chief of Station, Gil Saudade, % arrived early this month.
He's taking over the labour and student operations but Bacon will keep the
ECURGE media operation. Saudade and I are working closely on preparing
agents to send to the Latin American Conference for National Sovereignty,
Economic Emancipation and Peace, scheduled for the first week of March in
Mexico City.

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Gil's agents are Juan Yepez del Pozo, Jr., J ECLURE-2, and Antonio Ulloa
Coppiano, J ECLURE-3. Until he arrived they were treated as developmental
prospects by Noland who was helping finance their takeover of the Popular
Revolutionary Liberal Party J (PLPR). This party is attracting a considerable
following among young supporters of Velasco, and we hope to use it to channel
these radicals away from support to Cuba and from anti-Americanism. Araujo's
supporters are among those we most hope to attract, and Gil will be certain that
the party keeps its leftist character and firm opposition to the traditional
Ecuadorean political parties. The agent really in control is Juan Yepez del Pozo,
Sr., J a writer who is also director of the Ecuadorean Institute of Sociology. He
has larger political ambitions and is the party's chief advisor.

The Conference in Mexico City is sponsored by the leftist, former President
of Mexico, Lazaro Cardenas, as a propaganda exercise in support of the Cuban
revolution. Because communists and leftists from all over the hemisphere will be
there, headquarters asked stations months ago to propose agents who could attend
for intelligence gathering.

Besides Gil's agents, we're sending Atahualpa Basantes, J one of our best
PCE penetration agents. Both headquarters and the Mexico City station were
pleased that he can attend, and I've sent requirements to him in writing through
Dr Ovalle. If possible he will try to get invited for a visit to Cuba after the
Conference is over.

Our propaganda operations have been promoting considerable comment
adverse to Cuba. The general theme is the danger of penetration by international
communism in the Western Hemisphere through Cuba, but recently specific
stories have highlighted statements by Cuban exile leaders Manuel de Varona J
and Jose Miro Cardona. J Alarmist accusations of Cuban subversive activities
included one report coming from Cubans in Miami that Castro has sent arms to
guerrillas in Colombia and arms to Ecuador to use against Peru — these stories
originally surfaced in El Tiempo in Bogota and were repeated in El Comercio in
Quito. Still another story which came from Havana alleged that Castro's efforts to
penetrate South America are concentrated mainly through Ecuador and Brazil.
This story also accused Castro of contributing 200,000 dollars to the Mexico City
Conference. Araujo has helped our propaganda operations by appearing on
television in Havana and promising the support of the Ecuadorean government
and people to the Cuban revolution. The reaction here was strong, and both
Velasco and the Foreign Minister issued statements rejecting Araujo's generosity.

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Gustavo Salgado, J the well-known columnist, is placing most of this
material for us, and he also arranged for a replay of follow-up propaganda about
the exile assault on the Cuban Embassy in Lima last November. The commando
leader has recently been interviewed by the Agenda Orbe Latinoamericano %
news service which is a hemisphere-wide propaganda operation of the station in
Santiago, Chile. He said that other documents captured during the raid (besides
the list of Peruvians paid by the Cuban Embassy in Lima) revealed that Cuba was
using certain Peruvians and Ecuadoreans in the hope of setting off an armed
conflict between the two countries, which in turn would prepare the atmosphere
for a communist rising in Peru. In his column today Salgado rehashed the
background and the interview and called for the publication of the names of the
Ecuadoreans working in this Cuban adventure. Araujo, of course, would be first
on the list. The 'other documents' are, of course, also Agency produced.

The purpose of the campaign is to prepare public opinion so that reaction to
the Cuban invasion, when it comes, will be softened. Other stations in Latin
America are doing the same, but here we can also tie the propaganda to Cuban
interference in the boundary dispute.

Quito 18 February 1961

Velasco is reacting strongly to the leftist campaign to force the Foreign
Minister to resign, and some of our reports suggest this may be the beginning of
the end for his fourth term.

Yesterday morning the Foreign Minister had accompanied a distinguished
Colombian jurist (an expert in international law and proponent of the Ecuadorean
thesis on the nullity of the Rio Protocol) to the Central University where he had
been invited to speak. As they arrived several hundred students began jeering the
Foreign Minister and throwing tomatoes at him. Several tomatoes hit him but he
found shelter in the building and the Colombian made his speech. Velasco was
furious because the scandal has upset his propaganda campaign for using the
Colombian against Peru, even though it was the Foreign Minister who was
attacked.

Today the government arrested five URJE members for taking part in the
incident, which in turn has caused another spate of protests. The CTE condemned
the arrests and also demanded freedom for the PCE Indian organizer Carlos
Rodriguez, who is in jail in Riobamba over the recent Chimborazo Indian rising.

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The Revolutionary Socialists are protesting because three of those arrested are
members of its youth group. The FEUE is protesting because the five arrested are
university students. The protests include demands for the resignations of both the
Foreign Minister and the Minister of Government, the latter for illegal arrest of
the students and the closing of the radio station on 1 February.

Quito 20 February 1961

This has been a day of great violence. Yesterday the Minister of Government
ordered the release of the five students but they refused to leave the jail. They
demanded a habeas corpus hearing because that would be held under the Quito
Mayor and could be used to embarrass Velasco and force the resignation of the
Minister. During the early hours of this morning the students were forced into
police cars and driven separately to isolated sectors of town where they were
forced out of the cars.

The law and philosophy faculties led by members of URJE began an
indefinite strike this morning for the resignations of the Ministers of Government
and Foreign Relations.

The strike committee is supported by the Quito FEUE leadership which has
called a forty-eight-hour strike for the whole university, and the university
council headed by the rector has issued its own protest against the government.

After the strike was announced this morning a Velasquista mob composed
mostly of government employees in the state monopolies and customs service
gathered at the downtown location of the philosophy faculty. After a verbal
confrontation with the striking students the mob began stoning them to force
them inside the faculty building. For much of the morning they continued to
control the streets around the faculty and to menace the students with terrible
violence.

The university administration and the students formed a special committee to
visit the Minister of Government to plead for police protection for the striking
students against the mob. The minister simply advised that the government would
not move against the strikers, leaving open the question of police protection.

About five o'clock this afternoon the mob gathered again, this time in
Independence Plaza where they chanted praise to Velasco and condemnation of
the students. From there they marched to the Ministry of Government where the
minister spoke to them from a balcony, saying he had acted legally in arresting

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the jive students for throwing tomatoes at the Foreign Minister, but that no
sooner were they released than they declared a strike.

I've had the surveillance team under Colonel Paredes scattered about the
downtown area since the strike began this morning. Paredes has given us their
reports on the movements of the mob and the danger that the students might be
lynched. We've cabled reports to headquarters but Noland isn't making
predictions yet on whether Velasco will last — he thinks there will have to be
some bloodshed before the military gets restless.

Quito 21 February 1961

Guayaquil was the centre of today's action. A street demonstration by FEUE
and URJE this morning was attacked by Velasquista mobs controlled by the
Mayor (unlike Quito, in Guayaquil the Mayor is a powerful supporter of
Velasco). The marchers were forced several times to seek refuge in the buildings
of Guayaquil University when shots were fired from the mob. Police eventually
broke up the clash with tear-gas, and university authorities have protested to the
government and asked for protection for the students.

Another demonstration by the students in Guayaquil was held tonight and
was again attacked by Velasquista mobs. Eventually the marchers returned to the
university and who should be the main speaker but Araujo! He had just returned
from Cuba today and was carried by the students on their shoulders from his
hotel to the university. In his speech he lavished praise on the Cubans and
described recent protest demonstrations in Havana against the killing of Patrice
Lumumba.

Manuel Naranjo, $ Noland's agent who is a Deputy of the moderate Socialist
Party, got the party to publish a statement today criticizing the role of URJE in
the student strike and in the tomato attack against the Foreign Minister. Wilson
Almeida, J the editor of our main student propaganda organ Voz Universifaria,
also published a statement against URJE participation and in support of the
Foreign Minister. The Velasquista association of professionals published a
statement supporting the Minister of Government.

The main propaganda item today, however, was from the Cuban Embassy
which released a sensational statement alleging that during the coming Holy
Week attacks will be made against religious processions by persons shouting
'Viva Fidel, Cuba and Russia'. Blame for the attacks would be placed on the

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Cuban Embassy. In the statement the Cubans also denied the allegation circulated
recently that sixty Cubans had come to Ecuador to make trouble — adding that
agents paid by the US are entering the country from Peru. The statement also
tried to clarify Araujo's television remarks in Havana as an expression of
solidarity between Ecuadoreans and Cubans such as Velasco has repeatedly
expressed. The statement went on to defend the Cuban photographic exhibit now
on display in Quito as expressive of the works of the revolution, not communist
propaganda as suggested in recent rightist criticism of the exhibit, adding that the
exhibit is sponsored by the CTE, the National Cultural Institute and Central
University as well as the Embassy. The statement ended by alleging that all these
recent provocations are designed to disturb the good relations between Cuba and
Ecuador and to impede Cuban participation in the Inter-American Conference.
The real culprit, according to the statement, is the US government with assistance
from Peru because of Cuba's support to Ecuador on the Rio Protocol issue. The
statement ended with words of praise for Velasco.

From what I gather this is an extraordinary statement for a diplomatic
mission to make. It shows among other things, that our propaganda is hurting the
Cubans, and Noland hopes to get the political-action agents like Renato Perez
and Aurelio Davila to charge the Cubans with meddling in Ecuadorean politics.

Quito 22 February 1961

In response to the Cuban press release yesterday, our Ambassador issued a
statement today that had everyone in the station smiling. The Ambassador said
that the only agents in Ecuador who are paid and trained by the United States are
the technicians invited by the Ecuadorean government to contribute to raising the
living standards of the Ecuadorean people. He added that the US has promoted a
policy of order, stability and progress as demonstrated in our technical and
economic assistance programmes, and he suggested that the Cuban Embassy
present their accusations and appropriate proof to the Ecuadorean government.

In Havana the Cuban Embassy statement has been prominently replayed for
distribution over the whole continent, with emphasis that collaboration between
the US and Peru is part of a plan to isolate Cuba from the rest of Latin America
and to impede Cuban participation in the Inter-American Conference. They
couldn't be more accurate on the matter of isolation — that's the central theme of
our propaganda guidance.

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Today Guayaquil had the worst violence yet. The striking students in the
university buildings were attacked by a much larger group of Velasquista students
and government employees who forcibly ejected the strikers. Eight people were
hospitalized before the morning was over. In the afternoon two bombs caused
extensive damage at the Guayaquil Municipal Palace, although there were no
victims, and another bomb was reported by the Mayor's office to have been
hurled through a window into his office but without exploding. Expressions of
support to the Mayor have begun to pour in, and tonight he announced that
terrorists had tried to kill him. The Guayaquil base reported that several of their
agents believe the bombs were planted by the Mayor himself.

Press reports confirmed by our National Police agents indicate opposition to
the government has spread to Cuenca. Yesterday a group of students held a march
to the provincial governor's office to plead for payment of certain money that is
due to the school. They had nothing to do with the strikers here or in Guayaquil,
but police didn't know this and the march was attacked by the cavalry with sabres
and several students were wounded. Cuenca is a very conservative city and this
was bound to cause a reaction against Velasco. Today the university students held
a demonstration of support for the students in Quito and Guayaquil, and in
protest against the police stupidity yesterday. They also joined in the call for the
resignation of the two Ministers.

Quito 23 February 1961

Important efforts by the ECACTOR project agents, especially Aurelio
Davila, to focus attention on communism and Cuba are getting results. Today the
Cardinal issued another pastoral letter — this one signed by all the archbishops,
bishops and vicars in the hierarchy. Davila had been rallying the leadership of the
Conservative Party to call on the Cardinal for this new letter for some weeks. The
letter calls on all Catholics to take serious and effective action against the
communist menace in Ecuador, while accusing the communists of trying to take
advantage of the border problem for their own subversive purposes. The letter
also laments the weakening of the Ecuadorean case on the border issue because
of these communist tactics.

More important still was the call today by the Conservative Party for a break
in diplomatic relations with Cuba. This is the first formal call for a break with

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Cuba by any of the political parties, and it is based partly on the Cuban Embassy
statement of two days ago.

The new pastoral letter and the call for a break in relations are designed to
use patriotism and the border issue rather like Velasco does, but more subtly, in
order to discredit the extreme left and the Cubans. We hope a wave of mass
opinion can be created, especially among Catholics, that will equate URJE,
Araujo, the CTE and the PCE — and the Cuban Embassy of course — with divisive
efforts to weaken Velasco's campaign against the Rio Protocol. Hopefully this
will strengthen the Foreign Minister's position and suck Velasco himself into the
current. But because of Velasco's attacks against the political right, the animosity
is so great that he may resist and lash out again at our ECACTOR crowd. In that
case we will simply continue the campaign through all our propaganda
machinery to deny the enemy the banner of patriotism on the Protocol issue.

Through the same political-action agents we are promoting the formation of
an anti-communist civic front that will concentrate on getting a break in relations
with Cuba and on denouncing penetration of the Ecuadorean government by the
extreme left. Right now the signature campaign is coming to a close and
formation of the front will be announced in a few days.

John Bacon is starting a new programme through Gustavo Salgado, J his
main media agent, which will consist of a series of 'alert' notices to be placed in
the newspapers as paid advertisements against communism, the Cubans and
others. They will be short notices, and if Bacon can write them fast enough they'll
appear two or three times each week. The ostensible sponsor will be the non-
existent Ecuadorean Anti-Communist Front, not to be confused with the political-
action civic front which is going to be a real organization.

Quito 28 February 1961

Yesterday was National Civics Day and suddenly it seemed that the whole
country had forgotten its internal hatreds in the government- promoted
demonstrations against Peru. The demonstrations were sharply anti-Peruvian
because in recent days regular accusations have emanated from Lima that
Ecuador has accepted support on the boundary problem from Castro and
communism in general. The accusations are inspired by the Lima station in order
to preclude Cuban support to Ecuador and Ecuadorean acceptance if support
were ever offered.

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Today things were back to normal. Our ECACTOR-fmanced anti-communist
civic front was launched with a two-page newspaper notice containing about
3000 signatures and announcing the formation of the National Defense Front. {
In the statement at the beginning, the signatories, mostly Conservatives and
Social Christians, denounce communist penetration of the government, the CTE
and the FEUE, together with the selection of Ecuador by the international
communist movement as the second target after Cuba for conquest in America.
The purpose of the Front is described as defence of the country against
communist subversion, and the first objective is the break in relations with Cuba.

Although the political colouring of the rightist forces behind the Front is well
known, Noland hopes that the Front will have more manoeuvreability than the
political parties because it focuses on only one political issue: communism and
Cuba. As such the Front should be a more effective tool for pressure on Velasco
to break with Cuba and curb URJE, Araujo, the CTE and the rest. This will take
some doing — in a speech in a provincial capital today Velasco said that
communism in Ecuador is impossible. Today El Salvador became the seventh
Latin American country to break with Cuba.

Quito 5 March 1961

The student strikes have subsided and Velasco seems to have survived
although opposition to him is growing steadily, particularly among the poor
classes who voted for him, because of inflation and corruption in the government.

Our propaganda operations relating to communism and Cuba are intensifying
opposition to Velasco among the rightists, if that's possible. With financing from
the EC ACTOR and ECURGE projects, we've been turning out a stream of
handbills, editorials, declarations, advertisements and wall-painting, mostly
through Salgado and the National Defense Front. Bacon's' alert' notices in El
Comercio have also started.

Because of a new spate of rumours that the Inter- American Conference will
be postponed, the government has issued several statements on its determination
to maintain order at the Conference. Nevertheless, only on 1 March were the first
arrests made in Guayaquil for the 22 February attack against the university
strikers. A higher court forced the lower court to take action and those arrested
were revealed to have been commanded by an assistant to the Guayaquil Mayor.

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The FEUE and URJE leaders arrested during the strike have also been released.
This won't help the Conference.

The Mexico City Conference on National Sovereignty, Economic
Emancipation and Peace opened today. Three of the five Ecuadorean delegates
are our agents: if this were the case with all our stations the possibilities would be
endless. No word yet on whether Basantes, my PCE penetration agent, will go on
to Cuba.

Quito 7 March 1961

The Soviet Ambassador to Mexico arrived in Quito today for a goodwill
visit. He'll be here for about three days, discussing, among other things,
Ecuador's desire to sell bananas to the Soviets. We have a programme planned for
disruption and propaganda against him. It began today with a statement by the
National Defense Front calling for his expulsion. Another announcement
arranged by Davila is from the Catholic University Youth Organization,
denouncing the millions of dollars spent each year by the Kremlin to infiltrate
Latin America, adding that the budget against Ecuador for propaganda, agitators'
salaries, secret go-betweens and instructors in sabotage, explosives and weapons
is 250,721.05 dollars.

John Bacon's 'alert' is directed against this visit. It runs:

On the alert, Ecuadoreans, against communist agitators! The official Soviet
newspaper is Pravda — which means Truth, one of the tremendous sarcasms of
contemporary history.

If we unmask the actors of this farce, we will find that it is not the plain truth,
but distorted, calumnied truth. That's Russia and that's communism. And that is
now Cuba and Fidelism. Disciples used by the great international fakes, and at
the same time masters in deceit and subversion, try to introduce methods in
Ecuador similar to those that their dictatorship employs. First, in order to avoid
being responsible, the authorized agents wash their hands like Pilate even though
the first terrorist bombs are heard elsewhere. Alert, Ecuadoreans, there is
friendship that could dishonour us.

Still he has run into a problem in this campaign of 'alert' notices attributed to
the Ecuadorean Anti-Communist Front. He was surprised to read this morning
that a real organization with that name has been founded. They published their
first bulletin today with the theme: 'For Religion and the Fatherland We Will

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Give Our Lives'. The symbol of the group is a condor destroying with his
powerful claws a hammer and sickle.

Quito 10 March 1961

Six anti-communist organizations including the National Defense Front have
been denied permits to hold street demonstrations against the Soviet Ambassador.
Nevertheless, Davila sent some of his boys around to the Hotel Quito the other
night and they made a small fuss. Police protection of the Soviet delegation is
considerable and so far there's been no violence.

The Soviet Ambassador has seen the Ministers of Foreign Affairs and
Education as well as President Velasco, and it was announced that an Ecuadorean
commercial mission will soon visit the Soviet Union. The government wants to
sell bananas, Panama hats and balsa wood in exchange for agricultural and road
building equipment. The overwhelming police protection, which has included the
cavalry, when the Ambassador visits colonial churches and other tourist sites, is
helping our propaganda campaign.

Today's 'alert' notice was also against the Soviets:

Alert, Ecuadoreans! Communism enslaves. Communism imposes the hardest
slavery known through the centuries, and once it is able to enslave a people it is
very difficult for the victim to break the chains.

Hungary tried in 1956. The valiant Hungarians in an unsuccessful and heroic
struggle rose up demanding bread and freedom. But they were destroyed by
Soviet tanks that massacred more than 32,000 workers and reduced the whole
country to still worse slavery. In this terrible crime against humanity the puppet
traitor Janos Kadar went over to the side of the muscovite hordes that
assassinated his brothers and enslaved his fatherland. Alert! There are puppets of
the same kind who want to sell out Ecuador.

Tonight the Defense Front held an indoor rally at a theatre where Velasco
was attacked for his permissive policies towards communism, particularly his
continued favouritism towards Araujo. He was also attacked for inflation and the
increased benefits for representation and housing given to members of his
Cabinet. After the rally, participants were attacked in the street by a mob of
Velasquistas and URJE members shouting vivas to Araujo. Our Embassy-
sponsored bi-national cultural centre was stoned and shots were fired at the home
of a Social Christian leader.

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If the opposition to Velasco over Cuba and communism is getting serious, it's
even more serious over economic policy. In the past three days the Monetary
Board (comparable to the US Federal Reserve Board) has reversed the fiscal and
economic policies begun when Velasco took office — largely because of the
growing opposition of the sierra Chambers of Agriculture, Commerce and
Industry.

The problem derives from the competing economies of the coast and sierra
and from Velasco's having placed monetary policy in the hands of Guayaquil
Velasquista leaders. Just after the election these people started a campaign against
the old leadership of the Monetary Board and the Central Bank which under
Ponce had followed policies of stability through tight money and balanced
foreign trade. The coastal Velasquista leaders, however, claimed that such
policies were strangling economic development and they proposed expansion of
the money supply. When Velasco took power this group received the most
important government financial positions, including the Ministries of Economy
and Development, and eventually the chiefs of the Monetary Board and the
Central Bank resigned and were replaced by people from the same Guayaquil
financial circle.

Quito 11 March 1961

The Peace Conference in Mexico City is over, and a cable arrived from the
Mexico City station advising that Basantes has been able to get an invitation to
visit Cuba. He will be there for two or three weeks at least, and when he returns
to Mexico City he'll be debriefed by an officer from the Miami station. The
Mexico City station was quite pleased with our agents' work at the Conference.
The Conference adopted the predictable resolutions: support to the Cuban
revolution; annulment of all treaties that tend to revive the Monroe Doctrine;
opposition to the military, technical and economic missions of the US in Latin
America; nationalization of heavy industry and foreign companies: establishment
of cultural and diplomatic relations with the Soviet bloc and Communist China;
support to Panama in its efforts to gain possession of the Panama Canal.

Since most visitors of importance to Quito stay at the Hotel Quito I suggested
to Noland that we could provide better coverage of their visits by taking
advantage of the US company that manages the hotel in order to bug the rooms. I
suggested that we get a couple of the standard hotel lamps and send them to

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headquarters for installation of transmitters that we will be able to monitor from
other rooms in the hotel. Through the American manager (whom we all know)
we can get the lamps placed in the appropriate rooms before the guests arrive.

Noland liked the idea and is going to get two lamps through Otto Kladensky
J who rents the room used in the operation with Reinaldo Varea, J Vice-President
of the Senate. After we get them back we'll decide whether to use the manager or
some other means for placing them. I'm going to suggest battery-operated
equipment so that it will work if the lamp is unplugged.

Quito 15 March 1961

President Kennedy's speech to the Latin American Ambassadors in
Washington on the Alliance for Progress has caused much excitement here and
almost unanimously favourable comment. We're using Castro's speech the day
after Kennedy's against him: he said the Cuban revolution is supported by
Ecuador, Uruguay and Brazil. Through the National Defense Front we're
generating continuous propaganda against Velasco's policy on Cuba which may
well be what caused the stoning of Ponce's house two nights ago. The attackers
got away but they were probably Velasquistas.

Other propaganda is generated through coverage of the Cuban exiles. We are
getting fairly good presentation of the bulletins of the main exile group, the
Revolutionary Democratic Front, { and statements made by exiles when they
arrive, usually in Guayaquil, but so far Noland hasn't wanted to get into direct
contact with Cuban exiles in Ecuador.

Noland is financing the formation of the Anti-Communist Christian Front in
Cuenca, Ecuador's third largest city. The principal agent is Rafael Arizaga, J
ECACTOR-2, a leader of the Conservative Party there whose son, Carlos
Arizaga, J ECACTOR- 3, is a Provincial Councillor and will be active in the
Front. Formation of the Front has just been announced.

Bacon has solved his problem by changing the name of his nonexistent
organization to 'Ecuadorean Anti-Communist Action' instead of 'Front'.

Quito 19 March 1961

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The lines are drawing tighter, which is just what we want. The leftists have
conducted a signature campaign of their own to support Velasco over maintaining
relations with Cuba. Two days ago they published a declaration accusing the
Defense Front of aiding Peru by calling for a break in relations with Cuba. The
announcement was followed by three pages of signatures including Araujo and
other leftist political, educational and cultural figures.

Velasco himself, in a speech yesterday commemorating the deaths of his
supporters which occurred a year ago, when he arrived in Quito to begin
campaigning, insisted that Ecuador will never break with Cuba while he is
President. He also emphasized that Ecuador is not communist, but he alluded to a
subversive plot against him — a reference no doubt to recent rumours of rightist
plotting in the military. Araujo was a speaker at the same rally. If this keeps up
we will isolate Velasco on the Cuban issue so that his main support will be from
the extreme left.

On our side Gil Saudade, the Deputy Chief of Station, has had Juan Yepez
del Pozo, Jr, National Coordinator of the Popular Revolutionary Liberal Party,
issue a manifesto on his return from the Mexico City Peace Conference. The
manifesto, which is just being put out today, condemns the Conservative and
Social Christians for their current campaign against communism and Cuba while
also criticizing strongly the Liberal Party and the communists. In his appeal to
the Velasquista masses of poor people, Yepez calls for an integral revolution
favouring the poor, but insists that it be effected within the law. The manifesto
also denounces de facto regimes and totalitarianisms from both left and right. If
this party can really get moving we will bring under control much of Velasco's
leftist support, gradually bending it against the Cuban solution. Gil is now going
to have Yepez establish an organization in Guayaquil.

Quito 27 March 1961

Velasco is showing signs of erratic behaviour, partly at least as a result of our
propaganda. On 23 March he had the former Army commander under Ponce
arrested for subversion, but two days later he was released by the Quito Mayor at
the habeas corpus hearing. The government looked so ridiculous that Velasco
had to fire his Minister of Government, who today resigned 'for reasons of
health'. In announcing the appointment of his new minister, Velasco criticized

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what he called the tendentious notices appearing almost daily in the press. With
his habitual reference to his 400,000 votes he accused the propagandists of trying
to provoke disorder. Velasco's physician, Dr. Ovalle, J is examining Velasco
almost every week and he told me Velasco is feeling considerable strain over loss
of popular support, which he attributes to the rightist campaign against Cuba and
communism.

Atahualpa Basantes, my PCE penetration agent who went to Cuba after the
Mexico City Peace Conference, is back. He returned via Mexico City where he
was debriefed by an officer from the Miami station. In his first report, which I
just got from Dr. Ovalle, Basantes strongly insinuates he knows he's working for
the Agency, undoubtedly because of his meetings with officers in Mexico City.
Noland wants to continue the Velasquista pretext for the time being, however, so
I won't be meeting him personally yet. The agent can't stop praising the Cuban
revolution — I'm not sure what to do about this.

Quito 2 April 1961

Pleasant surprises for the station this week. Yesterday the University Sports
League professional soccer team elected new officers and Noland was named as
a Director. Manuel Naranjo, J the Socialist Party Deputy whom Noland met and
recruited thanks to the Sports League, was elected President of the club. This is a
matter of some prestige for Noland, an American Embassy official, to become an
officer of Quito's top soccer club. Partly, it reflects his ability to move in the right
circles and partly, no doubt, it is because he brought in uniforms and equipment
for the team via the diplomatic pouch and contributed generously from his
representation allowance. More important, the Socialist Party has been holding
its annual convention, the first since the party split last year into the moderate
wing and the extreme-left Revolutionary Socialist Party. Naranjo was elected
Secretary-General today which means we will have still more influence in
keeping the party moderately oriented. Naranjo and his colleagues call
themselves Marxists but they reject the concepts of class struggle and
dictatorship of the proletariat. It's important that we have some influence in a
group that will attract people of social-democratic persuasion.

Propaganda remains intense. The Catholic University Youth Organization has
just held a convention which we helped to finance through Davila. The
convention received considerable publicity, including a visit by a convention

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delegation to the Cardinal, and a closing declaration against communism and
Cuba was issued.

Quito 4 April 1961

Velasco continues to struggle against the rightist campaign against
communism and Cuba. He again lashed out against the National Defense Front, J
accusing the rightist political parties of using the Front to turn people against his
government for economic as well as political reasons. He was answered later by
the Deputy Director of the Conservative Party, who is also on the Executive
Committee of the Defense Front, with accusations that Velasco is letting himself
be carried away emotionally in his attacks on the Front. He also belittled
Velasco's accusations that the Front is being manipulated like an opposition
political party.

Velasco's nervousness is evident in a new purge in the Army leadership, and
in the resignation today of his Minister of Defense. The new minister is from a
clique of Guayaquil Velasquistas, and his appointment will intensify charges that
the President is being manipulated by the coastal Velasquista oligarchy.

Quito 15 April 1961

The invasion against Cuba has started with the bombing of Cuban airfields
by 'defectors'. A leftist rally was held against the bombing in Independence Plaza
with Araujo as main speaker, but no attack has yet been made on the Embassy.
Noland has arranged with Colonel Lugo J and also with Captain Vargas J to be
sure we get good protection during the next few days. The invasion will give
URJE and the others all the excuse they need for another round of window-
breaking.

Quito 18 April 1961

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The invasion really got going today but reports are conflicting and
headquarters hasn't said anything yet. There have been anti- US riots all day in
Quito and Guayaquil and the Army was called out to protect the Embassy,
USOM and the bi-national cultural centre. Araujo is leading the mobs here in
Quito.

Davila tried to get a demonstration going in support of the invasion but they
were outnumbered this time and had to be protected by police. Sentiment in
general is running against the invasion even though many of those against it
understand perfectly what would happen here if there was a communist
revolution. They just hate US intervention more than they hate communism.

The main Jesuit church in downtown Quito, a relic of colonial architecture,
was stoned tonight during the URJE riot, and later tonight a bomb exploded in
our Embassy garden. Things could be much worse however.

Quito 19 April 1961

Things are indeed much worse. This morning we received a propaganda
guidance cable — it was sent to all WH stations — with instructions on how to treat
the Bay of Pigs invasion. The cable said we should describe the invasion as a
mission to re-supply insurgents in the Escambray mountains, not to take and hold
any territory. As such the mission has been a success. Noland says this means the
whole thing has failed and that heads are going to roll in headquarters. I've never
seen him so glum.

The Defense Front got together a sizeable demonstration of support for the
invasion, which included speeches against Castro and communism. There was
also a march through downtown Quito with the burning of a Russian flag and
chants against Fidel, URJE and the stoning of the Jesuit church.

I don't know what to think about the invasion. It's like losing a game you
never even considered losing. I'm also worried about the AMBLOOD agents in
Cuba. Press reports indicate that thousands have been arrested, many simply on
suspicion of not supporting Castro. We have exchanged only five or six letters
with secret writing, and they weren't very revealing. Toroella J has large sums of
money, weapons and a yacht but apparently he communicates with Miami by
radio as well as by the SW via Quito. I wonder if he is all right.

Quito 24 April 1961

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Mostly through the efforts of Davila the anti-communist reaction to the Bay
of Pigs failure has driven the leftists off the streets. There was another pro-Castro
demonstration three days ago but then the government banned all outdoor
demonstrations for a week in order to let tempers cool. On the 2 1 st the formation
of the Ecuadorean Brigade for the struggle against Castro was announced with a
call for inscriptions and the claim that among those already signed up are military
officers, students, workers, nurses, priests and white-collar workers. The same
day an indoor rally supporting the invasion was held at the Catholic University.

By coincidence the traditional Novena to the Sorrowful Mother going on
right now is serving as a pretext to evade the ban on outdoor demonstrations. The
sermons have focused on the imminent danger of communism, which is
penetrating the country by passing itself off as Velasquismo. This can't please the
President because this is one of the most heavily attended religious occasions,
and is held at the Jesuit church that was attacked during the URJE demonstration
against the invasion. Yesterday the novena service ended with a street procession
that included thousands of people who turned it into a political rally against
communism and URJE. Today a one-and-a-half-page notice was published in the
newspaper condemning the attack against the Jesuit church. Araujo and URJE
have denied the attack and the chances are high that the Conservative Party Youth
or a Social Christian squad actually did it.

Through all the commotion Gil Saudade has been working on an
international organization. Last month the Secretary-General and the
Administrative Secretary of the International Commission of Jurists J (ICJ)
arrived in Quito in order to lay the groundwork for an Ecuadorean affiliate of the
iCJ. Saudade managed to arrange for them to meet Juan Yepez del Pozo, Sr., the
sociologist and leader of the Bolivarian Society who is chief advisor to the
Popular Revolutionary Liberal Party. J The visit by the ICJ officials was part of a
tour of Latin America to form affiliates where they don't already exist and to
generate publicity for the ICJ'S work.

***

Today the Ecuadorean affiliate of the ICJ was formally established, and
Velasco was named Honorary President. The Rector of Central University, a
Liberal-leaning independent, is President of the provisional Executive Board,
which also includes the President of the Ecuadorean Supreme Court. Other

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distinguished lawyers and legal associations are also taking part, including Carlos
Vallejo Baez, J who with Yepez runs the learned magazine Ensayos to which
Saudade gives financial assistance. Vallejo is also active in the PLPR, and Yepez
was named Secretary-General of the ICJ affiliate.

Gil is also working with the Inter-American Federation of Working
Newspapermen % (IFWN), which was founded in Lima last year with the
American Newspaper Guild J as cover. This organization is more like a trade
union, as opposed to the Inter- American Press Society which is mostly
composed of publishers. The IFWN serves to promote freedom of the press and
as a mechanism for anti- communist propaganda; Its annual conference has just
taken place in Quito, with statements against Cuba and the rightist dictatorships
in the hemisphere. They also called for economic, social and political reforms.
US journalists in attendance were used to spot and assess possible new media
agents for different stations, while Saudade worked through the host
organization, the Ecuadorean National Union of Journalists. %

Quito 30 April 1961

USOM has made its contribution towards countering the Bay of Pigs
humiliation. They delivered a check for half a million dollars to our Minister of
Labor and Social Welfare, Baquero de la Calle, } for colonization and integration
of the campesino. Present at the well-publicized ceremony was Jorge Acosta, J
who is head of the National Colonization Institute. Acosta has a strange
relationship with the station. Most of us know him fairly well and he's closer than
being just a 'contact'. Since we don't pay him he's not really a controlled agent,
but he tells us as much as he can. The problem he has is that Velasco seems bent
on losing all his support except the extreme left rather than break with Cuba. Not
even Acosta can overcome that stubbornness.

The Inter-American Conference is definitely off. Velasco publicly accepted a
proposal made jointly by the Presidents of Colombia, Venezuela and Panama that
it be postponed indefinitely We weren't surprised because now security would
really be a problem. The rum ours have never ended that one country or another
was proposing postponement because of security hazards, and recent discoveries
here of contraband arms shipments from the US haven't helped to allay the fears.

The day before Velasco announced the postponement he called for national
unity and the easing of partisan political passions. But the same day the Quito

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Chamber of Commerce denounced the failure of the government to publish the
weekly statistical bulletin of the Central Bank. It hasn't come out for five
consecutive weeks and the Chamber insists the government is making a
deliberate effort to hide the worsening economic situation. The government is
indeed considering a number of possible emergency economic decrees but has
announced ahead of time that none of them involve new taxes.

Quito 5 May 1961

Pressure on Velasco from the National Defense Front and from the Cardinal
has been helped by Velasco himself. On 30 April the Cardinal was expelled from
the prestigious National Defense Board which is composed of eminent citizens
and is responsible for advising on how secret defence funds are to be spent. Since
the announcement of Velasco's action many Catholic groups have made well-
publicized visits of solidarity to the Cardinal, including one today from the
Defense Front. The visits have usually included speeches on the inhumanities of
communism and the imminent danger of a communist takeover in Ecuador.
Velasco's action in expelling the Cardinal is clearly retaliation for the Cardinal's
criticism of the government on the communist issue, and sympathy for the
Cardinal especially among the poor and illiterate can only further erode Velasco's
power base.

Quito 7 May 1961

We have just had a remarkable breakthrough. One of our most valuable PCE
penetration agents, Luis Vargas, } recently reported on what he thought was the
beginning of serious guerrilla operations here. Vargas was not in the group
currently being trained but his close and frequent association with the leaders of
the group gave significant intelligence. Rafael Echeverria Flores, the number one
PCE leader in the sierra, and Jorge Ribadeneira Altamirano, also a PCE leader in
Quito and a principal leader of URJE, were the leaders, and the training was
being conducted by a foreign specialist whose nationality was unknown to the
agent.

Vargas the agent got the word in time to the station and Noland advised
Captain Jose Vargas, the Chief of the Police Intelligence. This morning
Lieutenant Sandoval J laid a trap and during the course of the morning twenty

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members of URJE were arrested on the mountain that rises above Quito.
Ribadeneira and Echeverria are among those arrested. The foreigner conducting
the training is a Bolivian and we're getting traces on him from the La Paz station
for police intelligence. Too bad he isn't Cuban, but the propaganda dividend is
going to be considerable anyway.

Quito 9 May 1961

The guerrilla arrests are headlines this morning! Yesterday the Sub-Secretary
of Government gave a press conference in which he distributed the police report
written by the intelligence unit. At Noland's suggestion the police report
described those arrested as only one small group among many other groups that
have been receiving guerrilla training for some time at secret sites around the
country. The press stories very effectively sensationalize the police report, which
described the training as including explosives, guerrilla warfare, street fighting
and terrorism.

The foreigner is Juan Alberto Enriquez Roncal, a thirty-two-year-old
Bolivian who came to Ecuador last month and had been training URJE members
in Guayaquil before coming to Quito. He has admitted everything to the police
including giving training sessions in Ribadeneira's law office.

Velasco issued a statement today that he will severely repress any terrorists,
but he has released all those arrested except Ribadeneira, Echeverria and
Enriquez. In Guayaquil the leader of the previous trainees was arrested, but the
release of the others is sure to provoke a negative public reaction, since last night
a power plant in Guayaquil was bombed.

Quito 13 May 1961

Basantes, another PCE penetration agent and a retired Army major, reported
that the PCE leadership in Guayaquil (Pedro Saad and company) is furious with
Ribadeneira and Echeverria. They think Enriquez may be a CIA agent
provocateur and that Echeverria and Ribadeneira fell into the trap.

However, the guerrilla trainer admitted today that he is really an Argentine,
aged thirty-six, named Claudio Adiego Francia. He told police intelligence that
he had no money and was giving the guerrilla training so that he could continue
travelling. Cuba is his destination but he said he has no invitation. He described

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his long background in Argentine revolutionary activities, and then changed his
story, now claiming he wasn't really giving training but only recounting to the
URJE and PCE people his experiences in Argentina.

This new twist is keeping the story in the newspapers and the case has been a
help to our signature campaign for mercy for the Bay of Pigs prisoners. The
campaign has been promoted by stations all over Latin America. In Quito the
ECACTOR political-action agents have circulated the petition: today the
telegram to Castro pleading mercy was published, followed by two pages of the
more than 7000 signatures obtained.

Student operations of the Guayaquil base have had a series of successes in
recent months culminating two days ago with the disaffiliation of the FEUE from
the Prague-based International Union of Students.

This final victory began with the change in FEUE election procedures at
Portoviejo last December, followed by election victories at the University of
Cuenca in March and the Central University in Quito last month. In both
instances the forces led by Alberto Alarcon defeated the candidates for FEUE
offices put up by the Velasquistas and the extreme left. Our only defeat was at the
University of Loja where the leftist candidate won. The picture is confused in
Guayaquil because the FEUE has split between a Velasquista group that supports
the Mayor and an extreme leftist group led by members of URJE.

The vote today by the National FEUE Council in Quito will have to be
ratified by the FEUE Congress later this year, but in the meantime relations
between the FEUE and the Agency-controlled COSEC J in Leyden can be
cemented.

Quito 15 May 1961

Ambato is the site of the most recent action. Yesterday in Ambato a Cuban
photographic exhibit was inaugurated under sponsorship of the Ambato chapter
of the Cuban Friendship Society. The ceremony was held in the Municipal Palace
approval for which had been granted by the Ambato Mayor, a Revolutionary
Socialist. The Mayor in his speech went so far as to call the Quito Cardinal a
traitor, and the Cuban Ambassador gave a fiery speech against the US.

Following the speeches an unexplained electrical failure prevented the
showing of a film on Cuba and later a group of about twenty men invaded the
Palace and destroyed most of the photographs and mountings. The police arrived

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after the damage was done and the group left quickly, firing their revolvers into
the air as they went. No arrests were made.

Jorge Gortaire, J a retired Army colonel and leader of the Social Christian
Movement in Ambato, was the organizer of the raid. Noland has been financing
him from the ECACTOR project since last year to help build up a militant action
organization and to promote a political campaign against the Mayor. Careful
planning of the attack, especially through coordination with the police, was the
reason it was so successful. Even so, the Mayor is getting more photographs
down from Quito so that the exhibit can stay open.

Quito 22 May 1961

In Guayaquil the police recently arrested, at base request, three Chinese
communists who arrived some days ago. They had been given courtesy visas by
the Ecuadorean Ambassador in Havana and supposedly were here representing
the Chinese Youth Federation. The base tried to arrange for them to be held for a
long period, so that recruitment possibilities could be studied, but the order for
their expulsion had already been issued.

The police are carrying out the base request to sensationalize the case. The
official report charges them with propaganda and subversion, claiming they had a
powerful radio transmitter in their hotel room, with which they were in
communication with Cuba and other communist countries in the evenings after
ten o'clock. Preposterous charges, but there's so much fear and tension in the
atmosphere right now that most people will believe it.

The same day the Chinese communists were deported, a sensational plot to
assassinate Velasco surfaced. The attempted assassination was reported by a
Guayaquil radio station (falsely, for which the radio station was ordered to be
closed) but on checking sources the trail led straight to the Cuban Consul. The
Consul refused to testify in the investigation and has been expelled by the
Ecuadorean' government. His departure has given us another propaganda peg for
demonstrating Cuban intervention in Ecuador, even though he was simply a
victim of provocation because he had reported the plot to security authorities in
Guayaquil. It appears to us that the provocation was rigged by Velasco or his
lieutenants in order to appease the Defense Front and other anti-communists.

Here in Quito the National Defense Front has been more strident than ever in
its propaganda created through public meetings, press conferences and published

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statements. The Front is criticizing Velasco for his policy towards Cuba,
demanding the firing of the Ecuadorean Ambassador to Cuba over the
presentation of a portrait of Castro 'in the name of the Ecuadorean people',
demanding that Velasco suppress communism, and demanding the expulsion of
the Cuban Ambassador for his anti- US speech in Ambato. The Front continues to
insist that Velasco define himself on communism even though he recently
insisted in a speech that while he is President Ecuador will not become
communist. The Conservative Party has also joined the campaign for expulsion
of the Cuban Ambassador.

In Cuenca, Carlos Arizaga Vega, J a leader of the ECACTOR operation
there, circulated a petition and sent it to Velasco demanding the firing of the
Ambassador to Cuba over the portrait presentation. Velasco, for his part, has
dismissed the military commander of the Cuenca zone who is a well-known anti-
communist — provoking renewed criticism there.

In Ambato, the Mayor was severely denounced by Municipal Councillors for
his remarks about the Cardinal and for having granted use of the Municipal
Palace for the Cuban photographic exhibit. But at the closing of the exhibit
yesterday the Mayor, Araujo, CTE and PCE speakers all repeated the anti-clerical
themes. They began a march in the street afterwards, but were met by a Catholic
counter-manifestation organized by Gortaire and armed with rocks, clubs and
firearms. A pitched battle followed and, although shots were fired, no one seems
to have been wounded. The much larger counter-demonstration easily
overwhelmed the leftists and at one point Araujo was in danger of being lynched.
If the police hadn't intervened something serious might have happened.

Somehow amidst all these crises labour operations continue to move,
although not without some serious problems. CROCLE, our coastal organization,
has served consistently for anti-Cuban and anti- communist propaganda, but our
agents in it are not as effective in trade-union activities as we would like. They
are constantly feuding among themselves and failing to get out and organize.
However, they won't be terminated until Gil Saudade is able to move some of his
agents from the PLPR J into the leadership of the national free labour
confederation now in its embryonic stage. Miranda, J our Coastal Labour
Senator, is also ineffective and he is feuding with the CROCLE agents. Finally,
Jose Baquero, our Minister of Labor, is determined to promote the small and
ineffective Catholic labour group, CEDOC, instead of our budding, secular
organizations. His effectiveness is also limited because as Minister he is

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responsible for the public-health service, the social-security system, protection of
minors, the fire departments and cooperatives as well as labour matters.

On two recent occasions the International Organizations Division in
headquarters has sent in agents to help us. In March William Sinclair, J the Inter-
American Representative of the Public Service International J (PSI), and William
H. McCabe, J also a PSI representative, came to assist in planning for a congress
of municipal employees that a few weeks later launched a new National
Federation of Municipal Employees. Also, an exploratory visit was made by an
international representative of the International Federation of Plantation,
Agricultural and Allied Workers J (IFPAAW) for possible assistance in
organizing Ecuadorean rural coastal workers.

Quito 28 May 1961

The Cubans have made a timely manoeuvre. Yesterday Carlos Olivares, the
Cuban Sub-Secretary of Foreign Relations and their most important trouble-
shooter, arrived in Guayaquil. He is on a 'goodwill' tour trying to bolster Cuban
relations with South American countries, capitalizing, of course, on the Bay of
Pigs invasion. Today he saw Velasco, but we haven't been able to get a report on
their private meeting.

Olivares's visit coincides with new reports on the considerable publicity
given in Cuba to recent speeches by the Ecuadorean Ambassador at Cuban
universities. According to Cuban press releases the Ambassador has attacked the
US, alleging that Ecuador, like Cuba, has been the victim of the 'arbitrary, unjust
and rapacious American imperialism'. The reports have provoked new outrage
against Velasco on his Cuban policy.

Today Velasco gave another speech and made no attempt to hide the damage
our campaign is doing. He condemned persons unnamed for trying to divide the
country between communists and anti-communists, and he repeated that while he
is President, Ecuador will never become communist.

Our campaign through Salgado, Davila, Perez, Arizaga, Gortaire and other
agents goes on. John Bacon is also continuing to publish the 'alert' notices every
two or three days, and other propaganda themes include concern over the Bay of
Pigs prisoners and the recent guerrilla arrests in Quito.

In Ambato, Gortaire has managed to launch an Anti-Communist Front that
includes Liberals as well as the Conservatives, the fascist ARNE and others. This

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is the first instance of significant Liberal Party participation in anti- communist
fronts and clearly reflects the prestige and organizing ability of Gortaire.

Quito 29 May 1961

If our propaganda and political-action campaign doesn't force Velasco to take
the right action, the worsening economic situation will. Today the President of
the Monetary Board, appointed by Velasco himself, resigned in protest against
the damage to the economy that uncertainty over Cuba and communism is
causing.

Since the return in early March to policies of monetary stability, inflation has
failed to slow down while Velasco has created a considerable number of new
indirect taxes that are very unpopular. While Velasco and his lieutenants continue
their theme of 'forty years of Velasquismo' most of the people have been
struggling against their declining purchasing power. One indication of how bad
the situation is getting is the decline in free-market value of the sucre: from about
eighteen per dollar six months ago to over twenty-two right now.

The President of the Monetary Board, in resigning, attributed the worsening
economic situation to lack of confidence based on Velasco's tolerance towards
communism internally and his ambiguity towards Cuba. He insisted that Velasco
must take action instead of making philosophical statements, and he pinpointed
the following specific problems: the activities of the Ecuadorean Ambassador to
Cuba; the agitation emanating from the Cuban Embassy in Quito and the Cuban
Consulate in Guayaquil; the Cuban Ambassador's speech in Ambato; and the lack
of clear definition by Velasco on communism.

Velasco is really embarrassed by this resignation which Noland says is bound
to have some effect. The resignation statement couldn't have been better if we
had written it ourselves. Exactly what we want.

Quito 30 May 1961

Finally Velasco is taking action. Several of the Velasquista penetration agents
have reported that Velasco asked Olivares to withdraw the Cuban Ambassador.
There is not going to be a persona non grata note — simply a quiet exit. This is a

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significant start and it shows Velasco is facing reality: he just can't continue
ignoring the pressure of the Social Christians, Conservatives, Catholic Church
and all the other anti-communists — and us. As soon as we learn of the Cuban
Ambassador's travel plans we'll pass word for a hostile farewell committee.

On the negative side a judge today released Echeverria and Ribadeneira for
lack of evidence. He's the best friend of the extreme left in the court system and
was the last hope for those two. Earlier the habeas corpus proceeding had failed
them and the CTE campaign for their release hasn't been very effective. The
judge ordered documents from the police on the original sources of the police
information, including names of their informants. As the station is the only
source, this effectively killed the legal case.

Quito 3 June 1961

Velasco made a very important speech tonight. At a political rally he tried to
make the political definition that the Defense Front and the rightist political
parties have been demanding. He announced a doctrine of liberalism which for
him means cooperation rather than conflict between classes. He denounced
communism, praised representative democracy, and described his own course as
between the extremes of left and right. He also said that communism should be
attacked not by police repression but through the elimination of misery, hunger,
sickness and ignorance. He showed the effect of our campaign, charging the
anticommunists with trying to take away the bases of his support by dividing the
400,000 Ecuadoreans who voted for him on the pretext of anti-communism.

This speech, coming on the heels of the Cuban Ambassador's expulsion, will
tend to soften the campaign. Our goal is a complete break in relations with Cuba,
not just an expulsion. Economics will probably help us. The sucre is now down
to twenty-three per dollar from eighteen six months ago, and a controversy is
raging over inflation, especially the prices of medicines which are among the
highest in Latin America.

Quito 7 June 1961

Velasco's 'anti-communist' speech has been very well received and even the
Conservative Party has issued a statement of guarded approval. What most
people are watching, however, are his actions and we have some distance to

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cover before relaxing. The day after Velasco's speech, the Minister of Defense
made it clear that Velasco now considers his position defined as anti- communist
— a clear attempt to stop erosion of support from the station-backed anti-
communist campaign.

The Liberal Party has rather suddenly taken a strong stance against the
President, partly no doubt because of a recent attack by a Velasquista mob on
their paper El Comercio. At the annual celebration of the Party's founding it was
said that the past thirty years of Velasquismo have pulled down the county in a
cataleptic state and, of course, that only the Liberal Party can save it. The
Liberal's complaints are mostly founded on the worsening economic situation:
the sucre has now fallen to twenty-five.

Some relief has become available, however, largely because of Velasco's anti-
communist actions of the past two or three weeks. Today in Washington the
International Monetary Fund announced a ten-million- dollar stand-by loan for a
stabilization programme in Ecuador. In the announcement the IMF also said that
the Central Bank, which requested the loan, is going to adopt a policy of credit
restriction and other measures to end the flight of capital, recognizing also that
measures have already been taken to slow the fall in foreign-exchange reserves.

The IMF announcement was embarrassing to the government here, which
didn't want publicity. The Minister of Economy even declined to comment on the
announcement, saying that questions should be directed to the IMF in
Washington.

Quito 12 June 1961

This past week, since Velasco made his 'anti-communist' speech, has been the
first fairly calm period since I arrived. In the hectic pace as we've passed from
crisis to crisis I almost haven't noticed how far my Spanish has come along.
Noland is especially pleased with my progress on the language and also with the
way I have been developing friends among the Ecuadoreans, impossible, of
course, without the language. Mostly I've been spending time meeting people at
the golf-club while learning to play.

Janet has a mental block on the language and it's growing as a source of
friction between us. Among other things this limits her friends to those who
speak English and it also hinders her running servants and shopping. Politics,
unfortunately, are not interesting to her either. But these are small complaints and

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common, I'm told, at overseas posts. And they certainly pale before the big news:
in October our first child is due, something we didn't exactly plan but we were
both happily surprised.

The work routine at the station is arduous — nights, week-ends, whenever
things are happening. After reading the newspapers each morning we begin
writing and distributing papers: pouched dispatches on operations, intelligence
reports, cables for urgent matters. Noland insists that each day we all read the
cable chronological file so that we're up to date on all the incoming and outgoing
traffic. The pouched material, both out and in, is circulated so that each officer
will know exactly what the others are doing, their successes and their problems.
Each of us also looks over the flight passenger lists each day, and Noland insists
that we also read the State Department cables and pouched material handled by
the Embassy staff. With all this reading, I'm pressed to get out for agent
meetings, although I am only meeting directly about five. The worst is writing
intelligence reports because the special usage and format must be followed.

The propaganda and political-action campaign against Araujo, Cuba and
communism in general has clearly been the major station programme since I
arrived six months ago. The ECACTOR project has accounted for much of this
activity. It costs about 50,000 dollars a year and in a place like Quito a thousand
dollars a week buys a lot. The feelings I have is that we aren't running the
country but we are certainly helping to shape events in the direction and form we
want. The other main station activity, the PCE penetration programme, has
consistently provided good information. There's no question that Echeverria and
his group here in the sierra are doing all they can to prepare for armed guerrilla
operations. We have to keep the pressure on Velasco to break with Cuba and
clamp down on the extreme left.

Quito 15 June 1961

Velasco apparently thinks his 'anti-communist' definition had ended the
campaign. In a speech the other day he repeated his old theme that Ecuador will

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never become communist under him, but he insisted that he will not break
relations with Cuba without a diplomatic cause.

On the other hand Jorge Ribadeneira, the URJE leader arrested on the
guerrilla training exercise, has been sent to an isolated Amazon jungle outpost to
do his military service. His absence will be a severe blow to the URJE leadership
in Quito and also to the PCE.

Through Gustavo Salgado we are trying to relate the guerrilla arrests last
month to exile reports on guerrilla training in Cuba. The JMWAVE station in
Miami recently released an article on guerrilla training in Havana of groups of
ten to fifteen who have been arriving from various Latin American countries. The
article was passed to Salgado who added the URJE training episode of last month
and arranged for publication on two consecutive days. Somehow we have to
retain the sense of urgency in the propaganda campaign on communism and
Cuba.

Today the Foreign Ministry announced that the Ecuadorean Ambassador to
Cuba is retiring from the post 'at the convenience of the Foreign Service'. Velasco
is certainly making an attempt to placate the rightists, but the fact is that he has
no other choice now.

Quito 16 June 1961

It was recently announced that Vice-President Arosemena will leave on 1 8
June for a trip to the Soviet Union, Czechoslovakia and Poland. We've known
about this trip for some time. The invitation is from the Supreme Soviet and the
group will include several legislators as well as Arosemena. Formally this is a
'private' trip with no diplomatic or commercial purposes, but Arosemena is well
known for his leftist ideas — he is also an alcoholic — and some mischief will
come from the trip for sure.

Velasco is against the trip because Adlai Stevenson arrives the day
Arosemena leaves, and Velasco is desperate for economic assistance. Stevenson
is touring Latin America promoting the Alliance for Progress and trying to pick
up the pieces from the Bay of Pigs fiasco, and Velasco is going to give him a list
of requirements. He doesn't want Arosemena's trip to jeopardize his requests for
aid to Stevenson, especially after expelling the Cuban Ambassador and firing his
own anti-US Ambassador to Cuba to prepare a favourable atmosphere. So
Arosemena's trip has sparked a sharp public exchange between him and Velasco.

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The Foreign Minister announced today that the Cabinet unanimously resolved
that Arosemena's trip at this time is 'inconvenient' with emphasis that the trip is
on Arosemena's own account with no official standing. Arosemena for his part
defended the trip by denouncing unnamed Velasquista government leaders as
money-crazed. Dr. Ovalle reports that Velasco is furious.

Quito 20 June 1961

Arosemena left as planned and today Ambassador Stevenson also leaves.
Velasco presented Ecuador's development needs in a seventeen-page
memorandum that lists initial requirements totalling about 200 million dollars.
Stevenson also met with moderate leaders of the Quito FEUE chapter and with
leaders of the free trade -union movement. I had a short chat with him in the
Embassy yesterday. In a few days an Ecuadorean delegation headed by the
Minister of Development will leave for Washington to press for new loans.
Arosemena's trip doesn't seem to have damaged Velasco's requests to Stevenson,
but the split between the two won't be mended easily.

Today Velasco changed his Minister of Government again. He named a
former Defense Minister under Ponce in what is an obvious move to make
adequate security arrangements before the Congress reconvenes in August.

Quito 29 June 1961

Noland has decided to move ahead on coverage of the Cubans here by
putting a telephone tap on the Embassy. He asked me to take charge of this new
operation, and a few days ago he introduced me to Rafael Bucheli, J the engineer
in charge of all the Quito telephone exchanges. Bucheli is an old friend of Noland
because his brother (cryptonym ECSAW) was our principal political-action agent
in the Ponce government until he was killed in an automobile accident. Bucheli is
going to make connections in the exchange where his office is located and which
serves both his home and the Cuban Embassy. Noland also introduced me to
Alfonso Rodriguez, J the engineer in charge of all the telephone lines system
outside the exchanges. Noland met Rodriguez through his work on the University
Sports League soccer team where Rodriguez is also active. He recruited
Rodriguez who suggested that Bucheli might also help, not knowing yet that
Bucheli had also agreed.

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The two engineers, Noland and I began planning the operation but Noland is
going to let me handle it alone. The first thing I must do is get headquarters
approval for the operation and some equipment from the Panama station where
the TSD has just set up a regional support base. The Panama station is located at
Fort Amador in the Canal Zone where they have various support staffs who are
able to save several days travel time to most of the WH stations. Then Rodriguez
will run a special line to Bucheli's house where we'll set up the LP. I'll ask
Francine Jacome, who was writing the cover letters for the AMBLOOD SW
messages, to do the transcribing.

Quito 7 July 1961

Good news from Velasco for a change. Today he appointed Jorge Acosta
Velasco J as Minister of the Treasury. Until now Acosta has been Director of the
Colonization Institute and the Vice- President of the National Planning Board,
somewhat removed from his uncle, the President. He has been keeping Noland
informed on Velasco's obstinacy over breaking with Cuba, but now he'll be able
to work on the problem from within the Cabinet.

Ambassador Bernbaum is also trying to soften up Velasco on the Cuban
problem. Thanks to his insistence a five million dollar development loan for
housing has just been approved, and he also arranged an invitation for Velasco to
visit Kennedy, which will be announced in a few days, probably to take place in
October.

Davila and the Conservatives continue to squeeze. Today the Party forbade
any of its members to accept jobs in the Velasco administration.

Quito 11 July 1961

The Cardinal issued an anti-Cuban pastoral yesterday which may have
overshot the mark. It's inflammatory, alarmist, almost hysterical in its warning
against Cuba and communism. He urges all Ecuadorean Catholics to take action
against communism but he doesn't say what action. The statement is so emotional
it may be counter-productive, but Noland has faith that the Davila crowd, who at
our instigation urged the Cardinal to produce it, know what they are about.

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Today we distributed an unattributed fly-sheet through the ECJOB team. This
severely attacked the Cardinal for these statements. The Catholic organizations
are at once, as expected, beginning their protests.

Quito 15 July 1961

The political situation has taken a new turn that promises to obscure the
Cuban and communist issues. Opposition to the government has suddenly united
behind Vice-President Arosemena, thanks largely to Velasco himself.

Three days ago Velasco appointed a new Minister of the Economy who is a
paving contractor with large government contracts. He is also associated with the
Guayaquil financial interests surrounding Velasco and his appointment
immediately rekindled the criticisms that Velasco is dominated by the Guayaquil
clique. Yesterday the government announced the unification of the exchange rate
which will mean that importers of machinery, raw materials, medicines and other
basic materials will have to pay about 20 per cent more in sucres for each dollar
of foreign exchange purchased through the Central Bank for their imports. The
unification measure is practically the same as an official devaluation of the sucre
and will cause prices to rise immediately, because no compensatory measures
such as tax adjustments or tariff exemptions were included. The economic sector
most affected will be sierra agriculture but prices generally will rise throughout
the country.

The unification decree has come just as a series of new indirect taxes has
been announced on carbonated beverages, beer, official paper, unearned income,
highway travel and other articles. These taxes will also cause prices to rise or
buying power to drop and they violate Velasco's own recent statements that taxes
are already too high.

In Washington the International Monetary Fund has issued a statement
supporting the measure on unification, which is not surprising because everyone
knows unification was a condition for the ten-million-dollar standby announced
last month. In Ecuador, however, almost every significant political organization,
and other groups such as the FEUE and the CTE have announced opposition to
both unification and the new indirect taxes.

Announcement of the new economic decrees couldn't have been made at a
worse time for Velasco, because the other event yesterday was Arosemena's
return from his trip to Moscow. His supporters, including leaders of the extreme

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left, had been promoting a big reception for him for over a week. At the Quito
airport several thousand turned out with Araujo as one of the leaders. Posters
were prominent with slogans such as 'Cuba si, Yankees no', 'Down with
Imperialism' and 'We Want Relations with Russia'.

Velasco is going to have to struggle hard to keep his balance. Just possibly he
will break with Cuba in order to gain rightist support, but we aren't taking bets.

Quito 23 July 1961

Arosemena has become undisputed leader of the opposition to Velasco.
Although the Conservatives and Social Christians continue their opposition on
the Cuban and communist issue, the new economic decrees have given the
FEUE, CTE, URJE, the PCE and the Revolutionary Socialists the perfect pretext
to line up behind Arosemena. Even the reactionary Radical Liberal Party and the
moderate Socialist Party under our agent Manuel Naranjo have joined the
extreme left in supporting Arosemena as the opposition leader.

Velasco is rattled by Arosemena's sudden popularity. During the reception for
him at Guayaquil the local tank units were placed on alert to create fear and
(unsuccessfully) to cut down attendance. While trying to defend the economic
measures on the grounds that the government needs more income for public
works, Velasco has bitterly attacked Arosemena for dividing the Velasquista
Movement. As Arosemena and some of his supporters are still calling themselves
Velasquistas even though they have turned against Velasco, the President has told
them to leave the Movement and form another group with a different name.

Guayaquil student operations have just had a setback. Elections were held a
week ago for FEUE officers at the University of Guayaquil — possibly the most
important FEUE chapter because of the high level of militancy of the students
there. Our forces, financed from the ECLOSE project and led by Alberto
Alarcon, lost to the extreme left. A leader of URJE was elected FEUE President.
The election came at a bad time just as the extreme left was making noisy
support for Arosemena against Velasco on the economic issues.

Quito 27 July 1961

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Gil Saudade, our Deputy Chief of Station, decided to risk the future of his
ECLURE party, the Popular Revolutionary Liberal Party (PLPR), on Velasco's
longevity in the Presidency His hope is still to attract the Velasquista left away
from Araujo even if this means open and direct support for Velasco. When the
party's first national convention opened in Quito a couple of days ago, Velasco
was named Honorary President.

Preparations for the convention have been underway for several months and
have included public statements on major issues. In late June, for example, the
PLPR published a statement supporting Velasco on his Cuba policy (a conscious
manoeuvre by Saudade) but strongly denouncing 'the twenty families that have
been exploiting Ecuador since before Independence and that seek to conserve
their privileges by keeping the country under the landlords and bosses'. The
statement also affirmed that the real enemies of the Ecuadorean people are the
Conservative Party, the Social Christian Movement, the Radical Liberal 'Party
and the Socialist Party — all of whom represent the rich oligarchies who oppress
the poor masses of the country.

Two weeks later the PLPR published another statement sharply criticizing the
most recent pastoral letters of the Cardinal, whom our agents accused of being
just one more oligarch using the communist scare for his own purposes. Right
now Gil has on the payroll the party's National Director, Juan Yepez del Pozo, Jr;
the National Coordinator, Antonio Ulloa Coppiano; J the Legal Counsel, Carlos
Vallejo Baez; J and the mastermind behind the operation, Juan Yepez del Pozo,
Sr. who holds no office.

Saudade is very pleased with the PLPR convention which ended last night
with Velasco as the principal speaker. The final session got ample publicity and
was overflowing with people. Although the party had to support Velasco on his
Cuban policy for tactical purposes, Saudade was careful to have Juan Yepez, Jr,
in his opening speech describe the PLPR as opposed to the extremes of left or
right, adding that the party could never approve of the despotism of Soviet
Marxism.

Gil has also picked up two new agents from the convention, both of whom he
plans to guide into the free labour movement to ensure station control beyond the
CROCLE operation of the Guayaquil base. One of the new agents is Matias
Ulloa Coppiano, J brother of Antonio Ulloa who is PLPR National Coordinator.
Matias is a leader of a collective transportation cooperative. The other new agent

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is Ricardo Vazquez Diaz, J a leader of the Guayaquil PLPR delegation, who was
one of the secretaries of the convention.

Quito 31 July 1961

Velasco and the Cubans seem to be on the verge of establishing a mutual-aid
society. Yesterday an interview with the new Ambassador was published wherein
the Ambassador claims that Cuba was the first country to back Ecuador in its
demand for revision of the Rio Protocol, comparing the forceful imposition of the
Protocol to the imposition by the US of the Piatt Amendment and our retention of
the Guantanamo naval base. Today the Foreign Ministry issued a statement
emphasizing Ecuador's opposition to any form of collective or multilateral
intervention in Cuba.

The Defense Front forces, however, haven't relaxed. At a pro- Cuba rally
three nights ago Araujo's speech was interrupted by an unexplained power
failure. Police troops and cavalry outside the theatre prevented another riot with
counter-demonstrators. Similarly, when the new Cuban Ambassador presented
his credentials at the Presidential Palace, an anti-Castro group sent by the
Defense Front clashed with an URJE group that had come to the Palace to cheer
the Ambassador. A riot followed and was finally broken up by the police with
tear-gas.

The TSD support office in Panama sent tape-recorders, dial-recorders and
actuators for setting up the telephone tap on the Cuban Embassy (cryptonym
EC WHEAT). Last week the audio technician, Larry Martin, J was here to train
Rafael Bucheli J to use the equipment, and Bucheli made the connections in the
exchange aided by an assistant. Bucheli and the assistant are both active in the
Quito model airplane club and I'm going to get a catalogue from headquarters so
that they can select items that I can order through the pouch. Later we'll talk of
salaries.

Quito 4 August 1961

Velasco's tactics of bullying the opposition have cost him another Minister of
Government. In a recent open polemic between the Minister and the National
Director of the Radical Liberal Party the Minister launched such severe personal
insults that he was challenged to a duel by the Liberal leader. Yesterday the

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Minister resigned so that he could accept the challenge, since duelling in Ecuador
is illegal. The Liberal leader, who is from Guayaquil, flew up to Quito yesterday
for final preparations, but he was met at the airport by several hundred rioting
Velasquistas, most of whom were plain-clothes policemen and employees of the
government monopolies and customs. The Liberal leader barely escaped lynching
while several international flights were disrupted because of the tear-gas used by
police and the general chaos. The duel was later called off, however, because the
seconds somehow arranged for satisfactory excuses by the ex-Minister and
honour was satisfied.

During the riot at the Quito airport a touring Soviet goodwill delegation flew
in unexpectedly. We've had reports from other WH stations on their tour but the
exact date they would proceed to Quito was undecided, probably to avoid a
hostile reception. Our National Defense Front agents will publish statements and
demonstrate against the visit. They are staying at the Hotel Quito but we still
have not received the bugged lamps back from our technical support base in
Panama.

Quito 31 August 1961

Our propaganda and political-action campaign to keep the opposition to
Velasco focused on Cuba and communism is being diverted because of the
greater importance of last month's economic decrees on unification of the
exchange rate and new taxes. Inflation has also become a major public issue. The
government, however, is determined to retain the economic decrees in order to
stimulate exports. Similarly, the new taxes are being justified as needed for the
police, armed forces, education and public works. Nevertheless, the decrees have
become the unifying issue for Velasco's opposition, and tomorrow the Chambers
of Commerce of the entire country will call for repeal of the unification decree.

The Congress, which reconvened three weeks ago, is the centre of opposition
political debate, and already the Velasquista tactics of intimidation by hostile
mobs in the galleries have been renewed. During one session, when the acting
Minister of Government was called to answer questions about police repression
in Guayaquil, nothing could be heard over the screaming of the galleries. Orange
and banana peelings and showers of spittle fell on the opposition Deputy who
was trying to question the Minister. Nevertheless, the Deputy spoke for several
hours against repression in Guayaquil, but he was vilified continuously by the

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galleries, finally being forced to seek shelter. Meanwhile, fights broke out on the
Chamber floor between Deputies, ashtrays were hurled by opponents, and the
Chamber's security forces refused to eject the rioters in the galleries.

Arosemena, as President of the Congress, continues as the leader of the
opposition to Velasco. Although loyal Velasquistas have been elected to offices in
both houses, the exact party balance is unclear because of uncertainty over
defections of Velasquistas to Arosemena — as in the case of Reinaldo Varea, }
who was reelected Vice-President of the Senate and has declared for Arosemena.
Two weeks ago a delegation from the CTE was invited by Arosemena to a joint
session of Congress with Arosemena presiding. Members of the delegation asked
the Congress to nullify the July decrees on unification and new taxes, adding that
if the decrees are not cancelled the CTE will call a general strike. This time
Arosemena had the Velasquista mob ejected when they started shouting.

Quito 2 September 1961

Saudade is certainly moving his Popular Revolutionary Liberal Party (PLPR)
along — this time with help from the Bogota station. Since arriving in Quito
Saudade has been corresponding with the Bogota station which supports a leftist
wing of the Liberal Party called the Revolutionary Liberal Movement (MLR).
Experience with the MLR in Colombia has been important for Saudade here
because he hopes to achieve success with the PLPR comparable to the Bogota
station's success with the MLR.

Some weeks ago Saudade had Juan Yepez del Pozo, Jr. of the PLPR invite
the leader of the MLR, Alfonso Lopez Michelson, J to visit Quito to exchange
experiences and to promote PLPR organizational work. Saudade, of course,
didn't reveal the CIA interest in the MLR but the Bogota station assured
acceptance of the invitation. I wonder whether Lopez is witting and contact with
him is direct or whether the Bogota station's access to him is through other MRL
leaders.

Lopez arrived yesterday and will see Velasco and Arosemena and make a
number of speeches. He will also visit Guayaquil. Saudade is picking up the tab,
and good publicity is already coming out.

Quito 4 September 1961

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Arosemena is cementing his political support from the CTE. Today the
Senate under his prodding gave 50,000 sucres to the CTE for its national
convention, scheduled for later this month in Ambato. The CTE responded with
thanks from the Revolutionary Socialist sierra Labor Senator and invited
Arosemena to address the convention's closing session; he accepted.

The CTE'S campaign against the decrees on unification and taxes continues,
along with promotion of a general strike, the date of which still hasn't been set.

Our PCE penetration agents report joy in the party over Arosemena's
cooperation with the CTE and the extreme left generally but leftist leaders are
worried about his alcoholism and will be careful not to get burned by getting too
closely associated with him.

In a few days we are going to bug the Czech Legation. For months Noland
has had Otto Kladensky eliciting information from the Czechs on possible
permanent locations for the Legation, and they finally signed a contract on a
large house now nearing completion. On checking the building records, Noland
discovered that the engineer in charge of construction is a friend of his from the
University Sports League. Noland also knows the owner of the house, but after
discussions with the engineer he decided not to speak to the owner for fear he
would oppose risking his contract.

Equipment has arrived from headquarters for five or six installations, and the
audio technicians are already here studying the building plans to determine how
the rooms will be used. Their first priority is the code-room, followed by the
Minister's office, and then studies and bedrooms.

Since the house is in one of Quito's nicest new areas, we have plenty of
support bases available for use during the installation. The plan is for the two
audio technicians to enter the house at night with the engineer who luckily speaks
English. I will be in an observation post overlooking the house which is a back
bedroom of the home of an Embassy USIS officer. Noland and Captain Vargas, J
Chief of Police Intelligence, and several of Vargas's strong-arm boys, will be in a
support base in the apartment of Noland's administrative assistant who lives only
two blocks from the target house. We will have walkie-talkie communications
between the target house, my OP and the support base. If anything goes wrong,
we will call on Vargas and his boys to step in and take over 'officially' while our
audio technicians make a getaway. Vargas and his boys won't know why they're
on standby unless they're needed.

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Quito 20 September 1961
Quito

The first try for the audio operation against the Czech Legation failed. It was
the technicians' fault and they were lucky not to have been caught. Bunglers!
Everything went perfectly until about five o'clock in the morning when, as I was
fighting to keep awake, I noticed the two technicians hurrying out of the house
with their suitcases of equipment and running down the street to the getaway car.
The engineer went running after them and they all drove away. I advised Noland
by walkie-talkie and we went to the Embassy to rejoin the technicians.

Incredible story. They worked all night making three installations in the walls
and were about to plaster over the transmitters when they were surprised by four
Indian guards who had been asleep in another room all night. The engineer is
known to the Indians, who were told by the owner not to let anyone enter the
house, and he told them our frightened technicians were simply some electricians
he brought to work. At five o'clock in the morning? While the engineer occupied
the Indians, the technicians ripped the installations out of the walls and packed
up.

The Czechs are visiting the house every day and are bound to notice the big
holes left where the installations were ripped out. Noland gave the engineer some
money to buy silence from the Indians but the engineer will have difficulty
making explanations to the Czechs. He'll just have to play dumb and hope the
Indians keep quiet.

It may be too late to try again because the Czechs will soon be moving in, so
I suppose headquarters will ask for telephone tapping instead. We have technical
problems on this operation too — the tap on the Cuban Embassy still isn't working
right. Headquarters wanted us to try a new type of equipment that actuates the
tape-recorders from the sound on the telephone wires instead of from changes of
voltage. The trouble is that the wires pick up a near-by radio station and all we're
getting is reels and reels of music.

The only real casualty of this botched job will probably be my dog. Poor
Lanita. I tested the dog tranquillizer on him last week just in case the Czechs
suddenly put guard dogs at the house — several years ago the station spent about
five nights using this special powder mixed with hamburger meat, but they
couldn't get the Czechs' dogs to sleep so they could make an entry. Now,

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however, only a few minutes after I gave Lanita the prescribed dose he began to
fade away. Hours passed and he just went into a coma. The vet came the next day
and took him away, saying his central nervous system was paralysed. He's still at
the kennels and if he dies I will send a big bill to the TSD.

Quito 24 September, 1961

The CTE convention got underway in Ambato yesterday and it was almost
like the Congress. Arosemena was one of the guests, and when the ceremonies
began a group of Velasquistas who had infiltrated the theatre began shouting
vivas to Velasco and abajos to Arosemena and communism. The CTE people
started shouting vivas to Cuba and Arosemena and a vast fist- fight ensued. Pistols
were fired into the air, stink-bombs were set off, and only when the police arrived
and filled the theatre with tear-gas could the brawl be stopped. It continued in the
street outside, however, while the inauguration ceremony began in the lingering
stench of tear-gas combined with stink-bombs.

Velasco simply cannot learn to compromise; this episode can only be
counter-productive.

Quito 25 September 1961

Now I know what happened to the agents in Cuba on the other end of the
secret-writing channel. El Comercio this morning carries a front-page article on
the arrest of Luis Toroella % and the other AMBLOOD agents and a story about
their plan to assassinate Castro. The article is a wire-service dispatch from
Havana based on yesterday's Cuban government press release and the El
Comercio article is naturally headlined with reference to the Quito- Havana
secret-writing channel.

Apparently the agents told everything, but the story doesn't include the
number of the Quito post-office box, which is under Colonel Paredes's true name.
I sent a priority cable to the Miami station asking that they inform us if the box
number was revealed, because Colonel Paredes will need to cover himself to
protect the surveillance team. The agents undoubtedly were arrested several
months ago, perhaps at the time of the Bay of Pigs invasion, but Miami should
have told us so we could cancel the box and perhaps destroy the records of the
name of the holder.

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I hadn't known they were planning to assassinate Castro but the press report
reveals a detailed plan using bazookas in an ambush near the Havana sports
complex. The radio channel must have been used for this operation. No
indication on how they were caught — I hope it wasn't from my bad SW
technique. No indication either of when they'll get the paredon [1] — maybe
already.

Quito 3 October 1961

The CTE set tomorrow as the day for the twenty-four-hour general strike
against the July economic decrees. They claim 500 unions will participate and
have been joined by the FEUE and by the Socialist Party of Manuel Naranjo.
Velasco described the strike as a proclamation of revolution against his
government, adding that if the new taxes are repealed there will be no money for
'teachers, police and military'.

For the past few days the government has been promoting a propaganda
campaign against the strike. Large numbers of 'unions' which are really
Velasquista political organizations have been publishing statements of boycott.
But the only real unions boycotting the strike are the Catholic CEDOC and our
own free trade-union movement including CROCLE, both of which are for
annulment of the taxes but against strengthening the CTE.

Tonight Baquero de la Calle, our Minister of Labor, made a nationwide radio
broadcast in which he called the strike a subversive political action having
nothing to do with labour matters, to counter CTE insistence that the strike is
purely for economic motives having nothing to do with politics. Both are wrong
because the strike is both political and economic, but we're against it because of
its extreme-left promotion.

No one doubts there will be violence when the strikers set up road-blocks to
stop transportation. We've set up special communications with our police agents
to get timely news on their reports from around the country. Tension is high.

Quito 4 October 1961

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Velasco is truly incomprehensible. This morning most of the commercial
activities in Quito and Guayaquil were normal and it was evident that the strike
would be only partially successful. However, by noon the police cavalry and
Army tanks had made such a show of force that everything closed, and as the
afternoon went on the strike became total in both cities. If the government hadn't
created such a climate of fear the strike would probably have been a failure. But
there was considerable violence in the provinces, especially at Tulcan, on the
Colombian border. Several have been killed and wounded there.

Quito 6 October 1961

The strike continues in Tulcan. Yesterday a Congressional Commission that
included Manuel Naranjo went there along with the Minister of Government and
other high police and security officials. The meeting of the Congressional
Commission, the Minister's group, and the Tulcan strike commission turned into
a political rally against Velasco and the government. The crowd, in fact, became
so menacing that the Minister had to seek refuge in a government building under
military protection.

Today a popular strike committee in the coastal province of Esmeraldas
decided to follow the lead in Tulcan by extending the strike indefinitely.

Velasco continues the hard line. Four of the principal CTE leaders are being
held since the day before the strike, and an arrest list of nineteen others has been
published.

Quito 11 October 1961

Velasco ended the strikes in Tulcan and Esmeraldas by promising public
works, and tomorrow he goes to Tulcan to listen to complaints. A few days ago in
Guayaquil he again defended unification and the new taxes, but he had the Mayor
accuse Arosemena of subverting public order from the Presidency of the
Congress. The Congress is now in its thirty-day extraordinary period, but there is
little sign that anything of significance will result — probably more riots and
clashes with Velasco. No one expects the lull of the past two days to continue.

Today the national golf tournament ended: I was awful but Noland and his
wife played well. I'm skipping the celebrations at the club tonight because Janet
is due to deliver any day. Her obstetrician is the Quito golf champion and will be

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leading the party tonight. I hope his early prediction of delivery on Columbus's
Day will be slightly off because he won't be in condition tomorrow.

Quito 12 October 1961

He was right! I had to get Alberto out of the golf-club at five o'clock this
morning. Miraculously everything was perfect — a boy.

Quito 16 October 1961

The political security office of the Ministry of Government has invented a
'plot' as a pretext for arresting opposition leaders. It's so unlikely that it will
probably make Velasco look worse than ever. For the past three days political-
security agents have been arresting opposition leaders, including a leftist deputy
who tried to question the Minister of Defense last August, and some of the
rightist leaders of the National Defense Front. Luckily none of our agents is
among the sixteen arrested although the security agents are looking for
communists and conservatives alike.

The 'plot' was announced today by the Director-General of Security who runs
the political security arm of the Ministry of Government — an office we've
purposely stayed far away from. Leaders of the 'plot', which was to break out
tomorrow night, are from the extreme right and the extreme left. A sizeable
quantity of arms was put on display, said to be of Iron Curtain origin and found
in the homes of communists during raids. No thinking person could believe such
a transparent fabrication, but Velasco obviously hopes it will rekindle the support
he needs from the poor and uneducated if he decides to close the Congress by
force.

In answer to the arrests and 'plot' the Liberals, Conservatives, Social
Christians, democratic Socialists and the fascist ARNE all joined today in a
coordinating bureau to fight assumption of dictatorial powers by Velasco.

Jorge Acosta, } the Minister of the Treasury, returned from Washington
today. He tried to make the trip sound successful by telling reporters of several
loans that are 'pending' and' ready to be signed', but he wasn't able to bring
immediate relief. Velasco must certainly be disappointed.

Almost unnoticed in this atmosphere of crisis was the resignation today of
Jose Baquero de la Calle, our Minister of Labor. Velasco wanted to get him out,

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so he let him fire the Guayaquil Fire Chief for irregular use of funds, then
cancelled Baquero's action, leaving the agent no choice but to resign. He has
been an ineffective minister and not a particularly effective agent either, so
Saudade isn't too sorry to see him fired. Now he'll try to ease him off the payroll.

Quito 17 October 1961

A shoot-out in the Congress last night has the whole country in an uproar,
and rumours are beginning to circulate that there may be a military move against
Velasco.

At a joint Congressional session last night the loyalist Velasquista mob
packed the galleries and began hurling orange and banana peelings as well as the
worst insults they could articulate. Loyalist Velasquista legislators joined the
rioters in the galleries, and when Arosemena, who was presiding, ordered the
galleries to be cleared the police refused to act. Stones began to fly from the
galleries and opposition legislators sought shelter under their desks while others
formed a protective shield around Arosemena.

By one o'clock this morning, after nearly four hours of rioting, shots also
began to be fired from the galleries, some directed right at Arosemena's desk. He
finally pulled out his own revolver, emptied it into the air, and left the chamber,
claiming that over forty policemen were in the galleries in civilian dress with
their service revolvers.

Today Velasco denied that he is seeking to install a dictatorship, while the
loyalist Velasquista legislators are justifying last night's riots as necessary for the
preservation of Ecuadorean democracy. Arosemena said today he will charge
Velasco before the Supreme Court with trying to assassinate him. In Guayaquil
today police with tear-gas, firing weapons into the air, broke up a FEUE
manifestation against the government. This can't go on forever.

Quito 24 October 1961

Yesterday the Minister of Government resigned rather than face political
interrogation by Congress over repression since the general strike three weeks

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ago. Velasco named Jorge Acosta as Acting Minister of Government, which is a
break for the station, but Noland thinks the situation may be too desperate to
hope for productive work with Acosta.

Today Velasco finally made his expected move for Conservative Party
support. Noland has been insisting with Davila that he do all he can to sustain the
Conservatives in making a break with Cuba their condition for supporting
Velasco. Thus Velasco's offer today of the Ministry of Labor was rejected by the
Conservatives, and Velasco's position continues to weaken. Acosta told Noland
that Velasco is as stubborn as ever on breaking with Cuba, but he is going to do
all he can to convince his uncle that the only hope of survival for the government
is to break with Cuba and gain Conservative backing.

I haven't seen anything in writing on whether the Agency or State
Department want to see Velasco survive or fall — only that our policy is to force a
break with Cuba. The obvious danger is that Velasco will fall because of his
obstinacy and that a pliable Arosemena, strongly influenced by the CTE, FEUE
and other undesirables, will end up in power. This makes Acosta's influence on
Velasco for the break absolutely crucial.

Quito 27 October 1961

We weren't able to re-enter the Czech Legation before they moved in, so the
audio operation is definitely lost.

A couple of nights ago someone fired shots through the huge front windows
of the Legation, but a bomb placed in the garden at the same time failed to
explode. The windows are very expensive and have to be imported from the US,
so that will keep the Czechs off balance for a while — what's left of the windows
is all boarded up. We didn't instruct any agents to make this terrorist attack, but
Noland thinks it was Captain Vargas, our Chief of Police Intelligence. Vargas's
office is in charge of investigating the attack.

I've just taken over a new operation — the Tulcan portion of the ECACTOR
political-action project. Noland had been meeting irregularly with a leader of the
Conservative Youth organization there, Enrique Molina, J but guidance and
funding were difficult because the agent could come to Quito only infrequently
and Noland lacks the time to go there: two long days to drive to the Colombian
border and back.

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The drive between Quito and Tulcan is so spectacular that it's beyond
adequate expression. There are green fertile valleys, snowcapped volcanoes, arid
canyons eroded by snaking rivers, lakes smooth as glass, panoramic views from
heights almost as from an airplane. All the way the cobble-stoned Pan-American
highway winds around and up and down the mountains, passing through
colourful Indian villages where every few kilometres the hats, ponchos, even the
hair-styles change to distinguish one community from another.

I took money to Molina and told him to use it for the anticommunist front in
Carchi province but he'll probably use it mainly for propaganda against Velasco. I
also set up a communications channel for him to report intelligence on political
unrest and we will try to alternate meetings; one month he'll come to Quito and
the next I'll go there.

Quito 1 November 1961

New violence broke out yesterday in Cuenca when a FEUE manifestation
against the government was severely repressed by police. The students had been
joined by a large number of people and when the demonstrators attacked
government buildings the Army was called in. Seven persons were wounded in
the shooting.

Velasco announced that in spite of the violence he will make an official visit
to Cuenca for its provincial independence celebrations the day after tomorrow.
There is much speculation that more violence will occur because the people in
the Cuenca area are so angry at Velasco's failure to alleviate the effects of
declining prices of the area's products — especially Panama hats. Hunger
migrations from the province, a rare occurrence even in Ecuador, have been
going on for some time, and representatives of the Quito government are
increasingly unpopular in this strongly Conservative and Catholic region.

Reports from our police agents indicate that the rioting in Cuenca is
continuing today.

Quito 3 November 1961

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Military rule was imposed yesterday in the province of Azuay (of which
Cuenca is the capital) as at least ten more people were wounded during a popular
uprising. Velasco fired the provincial governor and other leading government
officials and sent Jorge Acosta, Acting Minister of Government, to Cuenca for a
firsthand inspection. Acosta's trip only caused further protest, which was
followed by more arrests. Municipal authorities in Cuenca cancelled the
independence celebrations scheduled for today and asked Velasco not to come.

But Velasco is in Cuenca right now, and many reports are coming from the
radio and the police that serious new rioting and shooting is going on.

Quito 4 November 1961

In Cuenca yesterday at least two were killed and eight more wounded. On
arrival Velasco headed a procession on foot from the airport into town — a grave
provocation against the local hostility reflected in funeral wreaths and black
banners decorating the houses in sign of mourning. Along the way Velasco and
his committee were jeered, taunted and finally attacked with stones and clubs.
Shooting followed as the riot was suppressed, but Velasco insisted on presiding at
the military parade. Afterwards, however, he was forced to give his speech in an
indoor hall where he blamed the violence on opposition political leaders.

From Cuenca Velasco is motoring to several small towns for speeches and
then to Guayaquil. In the Congress today the debate over events in Cuenca went
on for eight hours. The CTE, FEUE and Revolutionary Socialists have
condemned Velasco, along with the Conservative Party and the Social Christian
Movement. A strange alliance for our political-action agents but momentum
against Velasco dominates the scene.

Jorge Acosta, Acting Minister of Government, got Velasco's approval to
expel another Cuban — this time it's the Charge d' Affaires because the
Ambassador is in Havana right now. After meeting today with the Cuban Charge,
the Minister of Foreign Affairs announced that the Charge will be leaving. He
gave vague reasons, suggesting an association between certain Ecuadorean
political figures and the Cuban government, but he emphasized that the Charge's
departure does not mean any change of policy towards Cuba. The Charge on the
other hand said he is leaving for Cuba voluntarily. It's clear that the Foreign
Minister was reluctant to follow Acosta's order to expel the Cuban — and it's
equally doubtful that this desperate move by Velasco to obtain support from the

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Conservative Party and other rightists will work. Acosta told Noland that Velasco
still refuses to break completely with the Cubans, but he is also going to move
against the Prensa Latina representative.

Velasco finally got some good news on economic aid. Two large loans have
just been signed in Washington: one a 4.7 million dollar loan for development of
African palm oil and sheep ranching and the other a 5 million dollar loan for
middle-class housing. Good publicity but no early effects expected.

Quito 5 November 1961

Today Jorge Acosta announced that the Cuban Charge is being expelled as
persona non grata. His clarification has been broadcast continually over the
government radio network. The Cuban Embassy, however, insisted (in order to
save face) that the Charge was never told that he is being expelled, while at the
Foreign Ministry confirmation was made of expulsion rather than voluntary
return to Cuba.

Quito 6 November 1961

If he goes, Velasco will not have gone quietly. More violence today, both in
Quito and in Guayaquil, where eleven have been killed and at least fourteen
wounded — all students and workers. We've been sending one report after another
to headquarters and the Guayaquil base is doing the same.

Congress went into session at noon and Arosemena accused Velasco of
having violated the Constitution. A FEUE delegation visited the Congress to
express support, and about three o'clock this afternoon the Congressional Palace
was sealed off by Army troops and telephone communications were cut.

This morning the entire Cabinet resigned, and Velasco, who only arrived
from Guayaquil at noon, spent most of the afternoon visiting military units. He
also made a radio broadcast in which he accused Arosemena of proclaiming
himself a dictator, adding that he was firing Arosemena as Vice-President.

I'll be spending the night here in the Embassy listening to the police and
military radios and taking calls from agents in the street. The latest is that
Arosemena and other legislators were allowed to leave the Congressional Palace
just after midnight, and as they walked towards Arosemena's house a few blocks
away they were arrested by Velasco's Director-General of Security. Arosemena

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and the others have been taken to jail, but several agents believe that it's a
deliberately dangerous scheme on the part of Arosemena to force Velasco to
unconstitutional action — which could provoke the military to move against him.

In spite of the Cabinet resignations, Acosta continues to function as Minister
of Government. This morning he expelled the Prensa Latina correspondent, a
Cuban who had been expelled last year under Ponce but had slipped back into the
country while Araujo was Minister of Government. We're sending situation
reports to headquarters practically every hour.

Quito 7 November 1961

It's all over for Velasco but the succession isn't decided. About five o'clock
this morning the engineers battalion in Quito rebelled on the grounds that Velasco
had violated the Constitution in arresting Arosemena, but was attacked by loyalist
Army units. A ceasefire occurred about 8 a.m. for removal of dead and wounded
and later in the morning the Military High Command decided that both Velasco
and Arosemena had violated the Constitution. They later named the President of
the Supreme Court to take over as President of an interim government. Velasco
has accepted this decision and the Supreme Court President has taken over the
offices in the Presidential Palace.

Velasco visited several of the loyalist military units after leaving the
Presidential Palace this afternoon and according to military intelligence reports
he is at the home of friends but asking for asylum in a Latin American embassy.
Acosta received asylum earlier today in the Venezuelan Embassy.

Arosemena is making a fight of his own to succeed to the Presidency. He and
the other legislators were released from prison tonight and went immediately to
the Legislative Palace where Arosemena convoked a joint session and was
himself named President. The constitutional limit on Congress's extended session
ends at midnight tonight, but the Congress is remaining in the Palace with
Arosemena.

Tonight I sleep in the Embassy again — just in case the Military Command
decides to move in favour of either of our two Presidents. Let's hope they stick
with the President of the Supreme Court, a rightist who would be favourably
disposed to a break with Cuba and suppression of the extreme left in general.

Quito 3 November 1961

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It's Arosemena! This morning the Legislative Palace was surrounded by
Army paratroopers and tanks but just after noon Air Force fighters flew low over
the Palace firing their guns into the air to intimidate the Army units. When it
became clear that the Air Force was backing Arosemena and the Congress, the
Supreme Court President resigned — he had lasted as President only eighteen
hours — and the Army units were withdrawn from the Palace. The Military High
Command recognized Arosemena later this afternoon.

During the hours before the outcome was known today, URJE and FEU E
demonstrations in favour of Arosemena broke out in different parts of Quito and
later expressions of support to Arosemena have poured in from all over the
country, especially from the CTE organizations, FEUE and URJE.

While the Legislative Palace was still surrounded this morning Arosemena
named a centrist Cabinet consisting of two Liberals, two Democratic Socialists,
one Social Christian, one Conservative and three independents. One of the
Socialists is Manuel Naranjo who was named Minister of the Treasury. This
afternoon Arosemena has been meeting with supporters, including Araujo whom
Arosemena described as 'that great fighter'. But when Araujo got up on a chair
and tried to give a speech to the crowd milling about, he only got out 'Noble
people of Quito', when he was shouted down with much ridicule. Arosemena's
first act, even though he won't be inaugurated until tomorrow, was to convoke a
special session of Congress for election of a new Vice-President and other
business. Reinaldo Varea Donoso was presiding officer at the first session today.

Velasco hasn't given up — quite. From the Mexican Embassy he issued a
statement that he hasn't resigned and he again reminded everyone of the 400,000
votes he got last year. Four times elected and three times deposed: a winner on
the stump but a loser in office. If he had only broken with Cuba he could have
won Conservative and other right support and weathered the left campaign over
economic issues.

Quito 9 November 1961

This morning before the inaugural ceremony the FEUE organized 'Operation
Clean-up' which was a symbolic scrubbing down and sweeping up at the
Presidential Palace to cleanse the place before Arosemena took over.

Arosemena and his new Cabinet then led a march of thousands from the
Legislative Palace to the Presidential Palace at Independence Plaza. In his speech

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Arosemena described Velasco's regime as one that started with 400,000 in favour
and ended with 4,000,000 against. In promising action instead of flowery
speeches, he pledged that his government will be one of peace and harmony and
that he will be President of all Ecuadoreans, not just the privileged few. But from
our point of view the most important of his remarks was his pledge to continue
diplomatic relations with Cuba.

In other ominous indications from the inaugural speeches the President of the
CTE attacked 'yankee imperialism' while praising the Cuban revolution and
calling for the formation of a Popular Revolutionary Front. (Formation of the
Front has already been reported by our PCE penetration agents and will include
the CTE, Revolutionary Socialists, PCE, URJE, Ecuadorean Federation of
Indians, and a new student front called the Revolutionary University Student
Movement.) The FEUE President also spoke, recounting the participation of the
students in Velasco's overthrow. Although he's a moderate and was elected with
support from the Guayaquil base student operation, opposition to Velasco has
been growing too strongly in recent months for economic and other motives to
permit Alberto Alarcon and his agents to keep the moderate FEUE leadership
from supporting Arosemena.

Diplomatic relations with the Ecuadorean government are continuing as if
Velasco had died or resigned — which means there is no question of formal
recognition of the new government. Everything's been legal and constitutional.

Quito 11 November 1961

The general political atmosphere is one of relief, optimism, satisfaction —
almost euphoria. After fourteen months of intimidation by Velasco, supporters of
the traditional parties are happy to see Arosemena in power, at least for the
moment.

Davila was elected President of the Chamber of Deputies for the
Extraordinary Congressional Session. Reinaldo Varea was elected Vice-President
of the Senate — offering, in his acceptance speech, to die before violating the
legal norms 'of this new and unmerited honour'. Congress then recessed for two
days and on Monday they will reconvene to elect a new Vice-President. There's
going to be plenty of tension over the week-end as deals are made to see who
becomes number two to Arosemena. The importance of this election is very great
because no one knows how long Arosemena can last with his frequent drinking

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bouts. Noland thinks Varea, one of the leading candidates, has a good chance.
The Rector of Central University, a Liberal-leaning independent, is the main
contender and is backed by the FEUE and extreme left.

Velasco was put on a Panagra flight to Panama this afternoon. Most of the
country is peaceful again and the vandalism and looting of stores has
disappeared. From the general strike on 4 October until now, at least thirty-two
have died in five cities and many more were wounded, forty-five in Quito alone.
It wasn't exactly a bloodless coup.

Quito 13 November 1961

Noland has pulled off a coup of his own. Over the week-end Varea called for
a meeting at the Hotel Quito safe house. He wanted to know if Noland knew
where he might get support for election as Vice-President, particularly whether
Noland thought the Conservatives might support him. Noland said he thought so,
but naturally had to be tactful in order not to reveal any relation with Davila or
other rightist agents.

Later Noland met with Davila who asked for advice on whom the
Conservatives should support for Vice-President. Noland was able to promote
Varea discreetly, reasoning that if the Central University Rector were elected, the
Vice-Rector, a Revolutionary Socialist, would take over the University. Davila
pledged to throw the Conservative vote to Varea. Later Davila and Varea met for
agreement, and Noland is convinced that neither knew of the other's meeting with
him.

This morning a notice in El Comercio placed through Gustavo Salgado
compromised the Rector pretty badly. It was an announcement of support
attributed to the Ecuadorean Communist Party and URJE. Denial will come but
too late because Congress reconve6ed at noon to elect the Vice-President.

The galleries were packed by the CTE and FEUE militants screaming for the
Rector's election. Davila was the presiding officer and on the first ballot Varea
got sixty-four votes — the most of the four candidates but twelve short of the two-
thirds needed. When the results of this vote were announced the galleries began
to riot. Varea was elected on the next ballot and the FEUE and CTE people really
broke loose, showering Davila with stones, spit and wads of paper. No police
around as usual.

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Varea, in his inaugural speech after Davila proclaimed him Vice-President,
seemed a little too humble: 'You will see that I lack the capacity to be Vice-
President of the Republic. I am full of defects, but against this is my life, which I
have filled with modesty and sacrifice. You and I with the help of God can solve
little by little the great problems that affect the Ecuadorean people.' Noland said
he's going to raise Varea from seven hundred to one thousand dollars a month,
and if he gets to be President we'll pay him even more.

Senator Humphrey arrived yesterday and we're reporting on possible
demonstrations against him. He'll visit Arosemena and address the Congress, but
yesterday he was right on target in remarks to newsmen: the US is ready to
finance the development of poor countries but their governments have to effect
agrarian, tax and administrative reforms. Otherwise the US will just be financing
eventual bolshevization.

Quito 17 November 1961

Arosemena's government is not yet two weeks old but there are clear signs
that he will have significant leftist participation in his regime. Appointments at
the Minister and Sub- Secretary level like Manuel Naranjo, the new Minister of
the Treasury, are certainly acceptable. But jobs on the middle level are
increasingly falling into hands of Marxists and other leftists who are unfriendly
to the US even though they may not be formally affiliated with the PCE or the
Revolutionary Socialists. The objectionable appointments are mostly in education
and the welfare and social-security systems, although the new governments of
Guayaquil and Guayas Province are also taking on an unfortunate colouring.

Both in the station and at the Guayaquil base we have been preparing
memoranda on the new faces in Arosemena's government for the Ambassador,
the Consul-General and the State Department in Washington. The memoranda are
based on our file information and also on queries to our PCE penetration agents
on Party reaction to the appointments. First indications are that influence from
the extreme left will be much greater under Arosemena than under Velasco.

Reaction from the State Department and from headquarters is moderately
alarmist and headquarters has sent special requirements on continued close
monitoring of Arosemena appointments. The worry is that this is only the
beginning and that Ecuador will continue sliding to the left much as Brazil is
moving that way already. On the Cuban question the Foreign Ministry announced

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today that the Cuban Charge expelled by Velasco can now remain — in the
confusion during Velasco's last days he had stayed on in Quito.

To counter these developments we are going to start a new round of
propaganda and political-action operations through the ECACTOR agents such
as Davila, Perez, the National Defense Front and propaganda agents such as
Gustavo Salgado. Reinaldo Varea, the Vice-President, will also be extremely
important because he is well-known as an anti- communist. He's a retired
lieutenant-colonel in the Army and he studied at Fort Riley and Fort Leavenworth
in the US. He was also Ecuadorean military attache in Washington and advisor to
the Ecuadorean representative on the Inter-American Defense Board, Sub-
Secretary of Defense and later Minister of Defense.

As an opening and somewhat indirect thrust, the Guayaquil base had the
CROCLE labour organization publish a half-page statement in the newspapers
yesterday on the danger of communism and the subservience of the CTE to the
WFTU in Prague. It called for repression of communism, warned against opening
diplomatic relations with the Soviet Union, and forecast the establishment of the
Ecuadorean Confederation of Free Trade Union Organizations as a democratic
alternative to the CTE.

Arosemena has started a shake-up in the internal security forces. Today an
investigation was started to verify the lists of agents on the role of the National
Security Directorate, the political security office responsible for Arosemena's
arrest on the night of 6-7 November. It is expected that many of the agents listed
simply do not exist and that their salaries were pocketed by top officers of the
NSD.

The top echelons of the National Police are also being shaken up. Captain
Jose Vargas, Chief of the Police Intelligence organization, will undoubtedly be
purged because he is well known as the leader of a secret pro-Velasco
organization within the police. We're hoping, however, that Lieutenant Luis
Sandoval, { the chief technician under Vargas and fairly apolitical, will not be
moved.

Quito 20 November 1961

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The station programme for penetrating the PCE is suddenly in better shape
than ever. The Pichincha PCE members have just elected a new Provincial
Committee and not only was Basantes re-elected but Cardenas and Luis Vargas J
were elected too. This gives us three agents on the eight-member committee
which is comparable to a national Central Committee because of the growing
split between the coastal leadership under PCE Secretary- General Pedro Saad
and the sierra leadership under Rafael Echeverria, chairman of the Pichincha
Provincial Committee.

I've taken over another operation from Noland — this time it's Colonel
Oswaldo Lugo, J our highest-level penetration of the National Police. The other
night Noland introduced me to Lugo who advised that he has been appointed
Chief of the National Police in the Southern Region with headquarters in Cuenca.
He won't be leaving for a few weeks, and meanwhile he will introduce me to his
stepson, Edgar Camacho, J a university student who will serve as cutout for
reports from Lugo's sub-agents in the CTE. Lugo expects to come to Quito at
least once a month when we'll meet, but he'll send urgent reports through
Camacho. A very friendly, intelligent and sharp officer.

Operations at the Guayaquil base got a jolt yesterday when their most
important labour and political intelligence agent died suddenly. He was Emilio
Estrada Icaza, J director of one of Ecuador's largest banks, president of a
fertilizer company, former Mayor of Guayaquil and well-known collector of pre-
Hispanic artifacts. It was through Estrada that the base organized the successful
campaign to oust Saad from the Senate and then formed the CROCLE labour
organization.

Quito 19 December 1961

There has been a flurry of activity prior to the Christmas lull, with little of
particularly happy significance to us. Three days ago Arosemena was the
principal speaker at the Congress of the CTE-controlled Ecuadorean Indian
Federation. He shared the platform with the CTE President, a Revolutionary
Socialist; Carlos Rodriguez, the PCE organizer in charge of the Indian
Federation; and Miguel Lechon, an Indian and PCE member who was elected
President of the Federation. In his speech to the thousands of Indians trucked into

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Quito for the ceremony, Arosemena promised quick action to abolish the
huasipungo.

The Indian Congress was followed yesterday by the Congress of coastal
campesinos which is the CTE'S organization for rural workers on the coast.
Arosemena was also the principal speaker at this Congress which, like the Indian
Congress, was highly successful for the extreme left.

Student operations of the Guayaquil base under Alberto Alarcon have
suffered another defeat. The National FEUE Congress recently ended in
Guayaquil and the extreme left dominated. Guayaquil University, with the FEUE
chapter run by URJE militants, will be the national seat for the coming year.
Delegations from the universities of Cuenca and Portoviejo, which are controlled
by Alarcon, walked out of the Congress when resolutions, supporting the Cuban
revolution and condemning the Alliance for Progress, were passed. Protests
against the take-over by the extreme left were also made through Davila and the
Catholic University Youth Organization and through Wilson Almeida, editor of
Voz Universitaria.

We also had a setback in student operations when a Revolutionary Socialist
was elected President of the Quito FEUE chapter. After the voting the new
officers issued a statement supporting Arosemena on the need for agrarian reform
and on 'non-intervention' with regard to Cuba.

Now both the Quito and the Guayaquil FEUE chapters, as well as Loja, are
in extremist hands. Meanwhile URJE continues to dominate the streets. A few
days ago a group of Cuban exiles (several hundred have arrived to reside in
Guayaquil) was attacked by URJE militants as they reported to a government
office to register.

Operations with the National Police are in transition. Jose Vargas {was not
only relieved of command of the Police Intelligence unit — he is under arrest
along with other members of his secret Velasquista police organization. Luckily
Luis Sandoval was left untouched and will continue in the unit. I've been seeing
him much more frequently since Vargas was removed and until we can evaluate
the new Police Intelligence Chief, Major Pacifico de los Reyes, J Sandoval will
be our main Police Intelligence contact — in effect he's a paid penetration agent.
De los Reyes came to the station under a pretext related to some equipment we
gave Vargas, but the visit was obviously to begin contact. Noland and I will
alternate contact with him without telling him that I am meeting regularly with
Sandoval.

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Colonel Lugo has taken command in the Cuenca Zone. Regular
communications with him will be through Edgar Camacho, his stepson, except
on the trips he makes to Quito every month or so. He wants me to hold his salary
and the salaries of his sub-agents for passing directly to him, so I imagine he'll
come every month.

Progress continues on the formation of a national free labour confederation.
On 16-17 December the existing free labour organizations led by CROCLE J
held a convention for naming the organizing committee for the Constituent
Congress of the national confederation — to be called the Ecuadorean
Confederation of Free Trade Union Organizations } (CEOSL). Enrique Amador,
one of the Guayaquil base labour agents, was President of the convention and
Adalberto Miranda Giron, } the base agent elected last year as Labour Senator
from the coast, was a principal speaker. The Constituent Congress was set for late
April of next year.

Nevertheless, serious problems are growing behind the facade of progress
among the free trade-union groups. Mainly it's a question of job security and
bureaucratic vanity among the leaders of the different organizations. Competition
among them to get the best jobs in CEOSL, when it's established, is creating
jealousies and friction. In early November, 10 Division's most important Western
Hemisphere labour agent, Serafmo Romualdi } (AFL-CIO representative for
Latin America), came to Guayaquil and tried to establish a little harmony. The
convention just over was a result of his trip, but the various leaders are still
fighting.

Now that Velasco is out, Gil Saudade's Popular Revolutionary Liberal Party
is bound to decline if not disappear completely. He is going to move some of his
agents from that party as fast as possible into the CEOSL organization, so that
with salaried agents in place the organization will have some discipline and order.
Otherwise it will be forever weak and no match for the CTE.

Our National Defense Front has issued another call for a break in relations
with Cuba, but at the recent Conservative Party Convention it was decided to
give general support to Arosemena while still insisting on a break with Cuba.
(The photographs published on the Conservatives' meetings are embarrassing —
they keep a crucifix, about half life-size, on the front of the speakers' table, and it
looks like a Jesuit retreat.) Davila was elected Sub-Director-General of the Party.
All the other political parties of importance have also held conventions, and all
are continuing general support to Arosemena.

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The State Department, too, is going to gamble on Arosemena and, perhaps,
on the anti-communist tradition in the military. A few days ago a new loan was
announced: 8 million dollars for budget support from the US government — forty
years at no interest. It had originally been negotiated by Jorge Acosta as Minister
of the Treasury under Velasco.

Congress recessed until next August with practically no legislation to show
for its 112-day session that cost over ten million sucres. Incredibly, Congress
took no action to repeal the decree on unification of the exchange rate that had
unified the opposition to Velasco. Arosemena and the CTE also seem to have
forgotten their big issue.

Quito 23 December 1961

The pace is slowing for the end-of-the-year celebrations and we've been
taking advantage to make the rounds with whisky, cigarettes, golf-balls and other
gifts. Noland is taking the new Administrative Assistant, Raymond Ladd, J
around to meet the Quito travel-agent and tourism crowd so that he can take over
and expand the station travel-control operations. The new principal agent will be
Patricio Ponce, J an old friend of Noland and prominent bullfight figure, whom
Ladd is going to set up in a cover office as soon as possible. In January I'll also
turn the EC STACY letter intercept over to Ladd.

We were fortunate to get Ladd for the administrative job, which is usually
filled by a woman, because he can handle some operations too. During his
previous assignment in San Jose, Costa Rica, he learned some operational
techniques, and although he was refused the operations training (for lack of
formal education) Noland wants to use him on non-sensitive matters. He works
in perfectly because he's a champion golfer, poker addict and general hustler.

When I stop to think about the excitement and continual state of crisis over
the past year, I realize that we've tried to attain only two goals and have failed at
both. We haven't been able to bring about a break in diplomatic relations with
Cuba, and we haven't been able to get the government to take action against the
growing strength of local communist and related movements. With Velasco, we
made no direct effort to overthrow his government. But by financing the
Conservatives and Social Christians in the quasi-religious campaign against Cuba
and communism, we helped them destroy Velasco's power base among the poor
who had voted so overwhelmingly for him. By the time Velasco introduced the

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new taxes and unification of the exchange rate, our campaign, led by the rightists
and assisted by inflation, had already turned popular opinion against him. It was
an easy matter then for the CTE, URJE, FEUE and others with extreme-left
inclinations to usurp the anti-Velasco banner using Arosemena as their anti-
oligarchical symbol and as legitimate successor.

Our principal tasks in the coming months will be to renew the campaign
against relations with Cuba through the National Defense Front and other
operations while monitoring carefully the penetration by the extreme left of
Arosemena's government — and their preparations for armed action. Although
both the second and third in succession to Arosemena are on our payroll, it would
be difficult to argue that the present security situation is an improvement on the
Velasco regime.

The fundamental reasons why there is any security problem at all remain the
same: concentration of wealth and power in the hands of the very few with
marginalization of the masses of the people. Such extreme injustice can only
encourage people to resort to extreme solutions, but there is still no sign of the
reforms that everyone talks about. I wonder about reforms. Certainly the attitudes
of my friends — whether blue-blood conservatives, new -rich liberals or concerned
independents — are not encouraging. Their contemptuous term for the poor who
supported Velasco — the chusma — shows how much distance has still to be
travelled.

My son is only ten weeks old but already he's beginning to show some
personality and awareness. Proud father, yes I am — he was baptized three weeks
ago in the old church in Cotocollao in a beautiful white dress given by the
families in the station.

I'm not sure what to do about Janet. We continue to grow apart for lack of
common interests. She knows practically nothing of my work, and her lack of
interest in politics and the language has turned her to bridge with other American
wives who tend to complain over trivia. I must help her, but the strain of daily
events leaves so little energy — except for golf where I'm spending most of my
free time. It's an unfair escape, I know, but it's also a relaxation.

Quito 2 January 1962

The Cuban Sub-Secretary of Foreign Relations, Carlos Olivares, is back in
Ecuador — this time drumming up support in advance of the OAS Foreign

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Ministers Conference scheduled for later this month in Punta del Este, Uruguay.
At the Conference, the US government hopes to get some collective action going
against Cuba — at least a resolution that all countries still having diplomatic and
commercial relations with Cuba move to break them. Yesterday Olivares met
with Arosemena at a beach resort and Arosemena reaffirmed his policy of non-
intervention towards Cuba. Today he said, Ecuador will be against any sanctions
against Cuba at the Punta del Este Conference.

One reason why we're trying to isolate Cuba is that headquarters believe the
Cubans are training thousands of Latin Americans in guerrilla warfare, sabotage
and terrorism. Every station is required to report on travel to Cuba, or to Moscow
or Prague, which are longer but also widely used routes to Cuba. Right now there
are at least sixty-two Ecuadoreans in Havana invited for the celebrations of the
third anniversary of the revolution. Some no doubt will be funnelled off to the
training camps. Miguel Lechon, President of the Ecuadorean Federation of
Indians, is in the group.

Quito 16 January 1962

Our new campaign is off to a bang — literally. The national convention of
URJE was to have opened in Cuenca two days ago but during the night before
bombs exploded in the doorways of two Cuenca churches. There were no injuries
from the bombs — the anti-communist militants under Carlos Arizaga Vega were
careful — but large 'spontaneous' demonstrations against the bombings occurred
on the day the convention was to start. Public authorities then banned the URJE
convention in order to avoid bloodshed.

The Conservative Party under Davila's direction has called on Arosemena for
a definitive political statement on Cuba and communism (the prelude to new
Conservative pressure). He answered that Ecuadoreans should concentrate on
national problems that are' above' the problem of Cuba. Davila is organizing a
demonstration for the day after tomorrow in Quito in solidarity with the Cuenca
one.

Yesterday the Popular Revolutionary Movement (formed by the PCE, URJE
and other extreme leftist organizations when Arosemena took over) sent a
delegation to visit the Minister of Government. They told him that the bombings
in Cuenca were not their work and that they reject terrorism as a political

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instrument. Last night in Guayaquil Pedro Saad's home was bombed — again no
one injured.

The main theme of our propaganda in recent days has been the shooting last
month in Havana when a group of Cubans tried to obtain asylum in the
Ecuadorean Embassy by crash-driving an automobile on to the grounds. Cuban
security forces opened fire to impede them and several bodies were carried away.

Gil Saudade keeps grinding away with his international organizations. This
time it's the Ecuadorean affiliate of the World Assembly of Youth J (WAY) —
called the National Youth Council. } It groups together students, workers, sports
organizations, rural and religious youth groups, Boy and Girl Scouts and the
Junior Red Cross. Gil runs this operation through Juan Moeller J who is
President of the Ecuadorean Junior Red Cross and who just put in another leader
of the Junior Red Cross as Secretary-General of the Youth Council. The main
business in coming months will be to arrange for Ecuadorean participation in the
WAY Congress scheduled for August and to pass headquarters' guidance to the
Ecuadorean leader on which issues to support and which to oppose.

Quito 19 January 1962

The campaign is back in full swing in Quito. Yesterday's rally against Cuba
and communism was enormous — and considerably helped by the government.
After days of promotional work by the ECACTOR-fmanced organizers;
yesterday morning the Minister of Government, a Liberal, prohibited public
political demonstrations throughout the country until further notice including the
rally planned for yesterday afternoon. His decision was based on the recent wave
of bombings and the tension caused by our renewed campaign.

The organizers sent the word around that the rally would take place in spite
of the prohibition as a show of solidarity with the recent demonstrations in
Cuenca and Guayaquil. The crowd gathered at a theatre on the edge of the
downtown area, soon grew into thousands, and began to move towards the
Independence Plaza. Police tried to stop it with tear-gas and cavalry but lost the
pitched battle that followed in spite of wounding twelve people. The
demonstrators also attacked an URJE counterdemonstration which quickly
disappeared. Riobamba thanks to the efforts of a new agent of Noland's named
Davalos. } Through Renato Perez and Aurelio Davila, Noland is also getting
money out for demonstrations in Loja and other provincial cities in days to come.

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The Punta del Este Conference opens today but in spite of all the pressure
we're bringing on the government through the right it appears that Ecuador will
not support any joint move against Cuba.

Quito 31 January 1962

The Punta del Este Conference finally ended yesterday All our efforts to get
sanctions against Cuba failed, thanks to opposition from countries like Ecuador.
Even on the resolution to expel Cuba from the OAS only fourteen countries
voted in favour with Ecuador among the abstentions.

Today the Social Christian Movement formally ended its participation in the
Arosemena government, and the Conservative Party is issuing a statement
against the government's position at Punta del Este. The Foreign Minister, a
prominent Social Christian, will either have to resign or quit the party.

Last night, the Czech Legation was bombed again and the huge new
windows just installed because of the October attack were completely shattered. I
drove by the Legation on my way to work this morning and the carpenters were
already at work boarding up again. The bombers escaped through the heavy fog
last night — must have been the Social Christian squad.

Quito 28 February 1962

Most of the important political parties have held conventions this month to
begin preparations for the local, provincial and Congressional elections
scheduled in June. Where possible we have instructed agents to push for
resolutions on the Cuban and local communist issues.

Once in the Independence Plaza the crowd frequently shouted against the
government and Arosemena. Speakers attacked communism and Castro and
called for a break in relations with Cuba while urging Ecuadorean support for a
programme of sanctions against Cuba at the coming Punta del Este Conference.

Yesterday, when the Minister of Government announced the prohibition of
demonstrations he denounced the right's 'battle plan' founded on the government's
lack of definition on communism and Cuba. Today the Minister called for a
pause in the fighting between Ecuadoreans over 'external problems', while the
Cardinal issued another anti-communist pastoral letter accusing the communists
of the bombings in the Cuenca churches.

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The campaign is getting under way in Tulcan as well. Yesterday an anti-
communist demonstration was held in spite of the prohibition and afterwards the
demonstrators clashed with leftists in a counter-demonstration.

The Ambassador is also active making propaganda that nicely complements
ours. Yesterday with considerable publicity he presented a cheque to Manuel
Naranjo } representing the second instalment of the 8 million dollar budget
support loan announced just after Arosemena took over. Photographs of the
Ambassador handing over the cheque were prominent in the newspapers this
morning.

Quito 21 January 1962

In Guayaquil the base financed a demonstration yesterday. Thousands turned
out after a bomb exploded in the morning at the entrance to one of the main
churches — again with no injuries. These bombings are mostly being done by a
Social Christian squad in order to whip up emotions. One would think the people
would realize this, but Renato Perez, Noland's principal Social Christian agent,
says they can keep it up as long as is needed. Participating organizations in the
Guayaquil demonstration were the Defense Front, our CROCLE labour
organization, the Liberals, Conservatives, Social Christians and the fascist
ARNE.

An anti-communist demonstration was also held yesterday in Manuel
Naranjo was only partially successful at the Socialist Party convention where his
party decided to join again with the Liberals in the National Democratic Front as
a joint electoral vehicle. The statement on re-establishing the Front called for
struggle against the totalitarian movements now operating in Ecuador — but also
affirmed the party's belief in Marxist philosophy as 'adapted to the Ecuadorean
political and economic reality'. In a foreign policy statement issued two days
after the convention closed, the principle of non-intervention in Cuba was
sustained along with opposition to expulsion of Cuba from the o A s and to the
economic blockade.

The Conservative Party has issued another statement insisting that
Arosemena dismiss communists and pro-communists from the administration
while alleging that a communist plot is underway for uprisings to occur soon
throughout the country. The Conservatives in Azuay Province (Cuenca) have

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elected Carlos Arizaga Vega, J one of our principal ECACTOR agents there, as a
party director.

Araujo is also active trying to build an organization that will attract leftist
Velasquista voters. His new People's Action Movement held an assembly today
in preparation for the elections.

Our own campaign continues to consist of stimulating charges of communist
leanings of appointees in the government. Debate has also continued over
Ecuadorean failure to back resolutions against Cuba at Punta del Este, and
Arosemena is being forced on the defensive. Through political action and
propaganda operations we are trying to repeat what we did with Velasco: cut
away political support on the Cuban and communist issues so that only the
extreme left is left on his side. For his part Arosemena has been protesting
frequently in public that communists will never become an influence in his
government.

The Argentine break with Cuba a few weeks ago, which was the climax of
increasing military pressure on President Frondizi, has already generated a spate
of new rumours that the Ecuadorean military will bring similar pressure on
Arosemena. The rumours are mostly rightist-inspired as suggestive propaganda
targeted at the military, but they may well have an effect — especially since less
than three weeks after the break Argentina got 150 million dollars in new
Alliance for Progress money. Now only Ecuador and five other Latin American
countries still have relations with Cuba.

Quito 1 March 1962

In another effort to create military ill-feeling towards the left, the Social
Christians infiltrated a FEUE march today in order to shout insults against the
military that appeared to come from the marchers. The march was through the
downtown area to the Independence Plaza where Arosemena spoke and the
leaders of the march presented a petition for increased government support to the
universities. The situation is indeed grave — professors at Central University, for
example, haven't been paid since last December.

The Social Christian plan worked perfectly. The march was headed by the
President of the FEUE, the Rector and Vice-Rector of the University and the
Ministers of Education and Government. At the Independence Plaza just before
the speeches began, shouts were clearly heard of 'Death to the Army' and 'More

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universities and less Army'. An almost electric current is passing through the
officer corps of the military services and new rumours, not ours this time, are
beginning on possible military reactions.

Quito 3 March 1962

Reactions to the Social Christian infiltration of the FEUE march have been
most satisfactory. Yesterday the Minister of Defense and the chiefs of all the
services issued a statement in which they admitted breaking a long silence on the
many activities going on that are designed to sow chaos in the armed forces and
separate them from the Ecuadorean people and the government. These activities,
according to the statement, are directed by international communism through
campaigns in periodicals, magazines, radio, rumour, strikes, work stoppages,
rural risings, militia training and, most recently, the FEUE demonstration of 1
March. Instead of a demonstration for greater economic resources, according to
the statement, the march was perverted to make propaganda against the armed
forces. The statement ended with an expression of the determination of the
Minister and the service chiefs to take whatever measures are necessary to defend
military institutions.

The military statement yesterday coincided nicely with a rally we financed
through Aurelio Davila with participation of the Conservatives, Social Christians,
ARNE, and Catholic youth, labour and women's organizations. The purpose of
the rally was another demand for a break in relations with Cuba, and Davila was
the principal speaker. He blamed the insults of 1 March against the military on
communists and Castroites who seek to form their own militias. He accused
Arosemena, moreover, of giving protection to the communist menace and, as
President of the Chamber of Deputies, he sent a message of support to the
Minister of Defense and the chiefs of the services.

Quito 16 March 1962

Fate's heavy hand has just fallen on our Vice-President, Reinaldo Varea.
Yesterday the government announced that a million dollars' worth of military
equipment purchased by a secret mission sent to the US last year by Velasco has
turned out to be useless junk. The announcement came just a couple of days after
one of Velasco's ex-ministers made a public call for Velasquistas to begin

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organizing for the June elections. Obviously the announcement was made to
begin a campaign to discredit the Velasquista movement prior to the elections.

Varea is implicated because as Vice-President of the Senate he was chief of
the purchasing mission. There is no accusation that any money was stolen, but to
be swindled out of a million dollars by a US surplus parts company is sheer
incompetence on someone's part. Photographs of the tanks and armoured
personnel carriers are being published — some without motors, others with no
wheels, others simply rusted and falling apart.

Varea had told Noland that the case might come to the surface but he had
hoped to keep it under cover. There's no telling how badly this will affect Varea's
position as Arosemena's successor, but Noland is in a really black humour.

The PCE has just held one of its infrequent national congresses. Basantes and
Cardenas attended as members of the Pichincha delegation. Divisions within the
party over whether to resort to armed action soon or to continue working with the
masses indefinitely are continuing to grow. Rafael Echeverria, the Quito PCE
leader, is emerging as the most important leader of those favouring early armed
action, although Pedro Saad was reelected Secretary-General and remains in firm
control. Unfortunately neither of our agents was elected to the new Central
Committee.

Quito 25 March 1962

For some days the anti-communist (Social Christian and Conservative) forces
in Cuenca have been preparing for another mass demonstration against relations
with Cuba and communist penetration of the government. Noland financed it
through Carlos Arizaga who will use it to show solidarity with the important
military command there. The affair was very successful. In spite of police denial
of permission thousands turned out with posters and banners bearing the
appropriate anti-communist, anti-Castro and anti-URJE themes. Demands were
also made for the resignation of Arosemena and his leftist appointees, and
expressions of solidarity with the military services against their extremist
attackers were also prevalent. A petition with 2000 signatures was presented to
the provincial governor, Arosemena's chief representative.

Colonel Lugo, National Police commander in Cuenca, advised that although
he was unable to grant permission for the street march because of orders from

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Quito, he was able to avoid taking repressive measures. The march in fact had no
police control and there was no disorder.

Quito 28 March 1962

The Cuenca military garrison under Colonel Aurelio Naranjo has suddenly
sent a message to Arosemena giving him seventy-two hours to break relations
with Cuba and fire the leftist Minister of Labor. The whole country is shaken by
the revolt although the outcome is uncertain because so far no other military units
have joined.

Arosemena spoke this afternoon with Vice-President Varea and with the
press. He's taking a hard line promising severe punishment for those responsible
for the rebellion. The traditional parties are ostensibly supporting Arosemena and
the Constitution, but the Conservatives have issued a statement insisting on a
break with Cuba and Czechoslovakia and a purge of communists in the
government. The FEUE, CTE, URJE and other extreme leftists are of course
backing Arosemena.

The key is the reaction of the Minister of Defense and the armed services
commanders here in Quito. We're checking various agents who have access but
haven't been able to get straight answers because apparently the military leaders
are taking an ambiguous position.

This Cuenca revolt is clearly a result of the renewed agitation we have been
promoting since January through the Conservatives and Social Christians. There
was no way to tell exactly when action of this sort would occur but several
sensational events of the past two days have probably had an influence. Yesterday
news reached Quito of an uprising at the huge Tenguel Hacienda on the coast
which is owned by a subsidiary of United Fruit and where communist agitation
has been going on for some time. Eight hundred workers are striking over the
company's contracting of land to tenant farmers, and the strike has touched off
rumours of other risings in rural areas. At a Social Christian rally yesterday
where Renato Perez was one of the speakers the Tenguel rising was attributed to
the communist leadership of the workers. Also yesterday, in Cuenca, the
provincial committee of the Conservative Party called on the National Committee
to declare formal opposition to the Arosemena regime. Key figures in this move
are Carlos Arizaga Vega in Cuenca and Aurelio Davila Cajas } on the National
Committee.

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The other sensation is the overthrow of President Frondizi by the Argentine
military. Although the Peronist victory in this month's elections is the immediate
reason for the military move there, we will interpret the coup in our propaganda
as related strongly to Frondizi's reluctance to break with Cuba and his general
policy of accommodation with the extreme left.

Quito 29 March 1962

The crisis continues. Today the Cuenca garrison issued a public statement on
the need to break relations with Cuba and Czechoslovakia and to purge the
government of communists. The Minister of Defense, the Chief of Staff and the
commander of the Army are all indirectly supporting the Cuenca commander by
not sending troops to put down the rebellion. In response to today's statement by
the Cuenca garrison, the Army commander publicly ordered the Cuenca
commander to refrain from political statements, but he also sent an open
statement to the Minister of Defense that the armed forces are in agreement on
the need to break with Cuba.

Demonstrations have occurred today in most of the major cities: in Quito one
in favour and one against Arosemena; in Guayaquil in favour of Arosemena; and
in Cuenca against — marchers there carried posters reading 'Christ the King, Si,
Communism, No'.

Arosemena is trying to strike back but in the absence of cooperation from the
military he's almost powerless. He had the entire Cabinet resign today, accepting
the resignations of the Ministers of Government (for allowing the security
situation to degenerate), Labour (as a gesture to the rightists who have focused on
him as an extreme leftist), and Economy (for being one of the Conservative Party
leaders of the campaign against communism and relations with Cuba).

Quito 30 March 1962

The stand-off between Arosemena and the Cuenca garrison has continued for
a third day although Arosemena is grasping for an alternative to save face. He
announced today that within ten or fifteen days a plebiscite will be held on
relations with Cuba. The idea of a plebiscite has already been proposed by
several groups including the Pichincha Chamber of Industries whose members
are suffering the effects of all the tension and instability of recent months.

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Arosemena may not have ten or fifteen days left for the plebiscite. This
afternoon in Quito a massive demonstration calling for a break with Cuba was
sponsored by the anti- communist forces including a four-hour march through the
streets. At the Ministry of Defense the Chief of Staff, a well-known anti-
communist, told the demonstrators that he and other military leaders share their
views on Cuba. The demonstration also had pronounced anti-Arosemena
overtones. Similar demonstrations have occurred today in Cuenca and Riobamba.
In the press we are stimulating statements of solidarity with the movement to
break with Cuba including one from the Popular Revolutionary Liberal Party J
which Gil Saudade had to wring out of Juan Yepez, Jr.

In spite of all the crisis other activities continue. Today Noland was honoured
at a ceremony presided by Manuel Naranjo for his year as a Director of the
University Sports League. He got a medal and a diploma of appreciation — plenty
of good publicity.

Quito 31 March 1962

A solution is emerging The Conservatives today formally ended their
participation in Arosemena's government, and conversations between Arosemena
and the National Democratic Front — composed of the Liberals, Democratic
Socialists and independents — have begun. One of the Front's conditions for
continuing to support Arosemena is a break with Cuba and Czechoslovakia.
Meanwhile the Electoral Court quashed the plebiscite idea for constitutional
reasons.

Conservative withdrawal from the government was highlighted by the
publication today of an open letter from the Conservative ex-Minister of the
Economy who resigned two days ago. In the letter the Cuenca rightist charged
communists whom Arosemena has allowed to penetrate the government with
thwarting the country's economic development.

The solution, interestingly, has resulted because Varea, the Vice-President, is
unacceptable to the military high command because of his implication in the junk
swindle. Otherwise Arosemena would probably have been deposed in favour of
Varea for his resistance on the Cuban break. The Liberals and others in the
Democratic Front expect to improve their electoral prospects from a position of
dominance in the government. And the Conservatives and Social Christians will
be able to campaign on the claim that they were responsible for the break with

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Cuba (if it takes place). Everyone is going to be satisfied except Arosemena and
the extreme left — although Arosemena will at least survive for now.

The Social Christian bomb squad finally slipped up last night. Just after
midnight they bombed the home of the Cardinal (who was sleeping downtown at
the Basilica) and a couple of hours later they bombed the Anti-Communist Front.
By a stroke of bad luck the two bombers were caught and have admitted to police
that they are members of the Anti-Communist Front itself. So far they haven't
been traced to the Social Christian Movement which planned the bombings.
These produced lots of noise but little damage, to provide a new pretext for
demonstrations of solidarity with the Cardinal.

Quito 1 April 1962

The crisis is over and the Cubans are packing. Today the announcement was
made that the National Democratic Front will enter the government with five
Cabinet posts and that relations with Cuba will be broken. The new Minister of
Government, Alfredo Albornoz, J is an anti-communist independent known
personally by Noland. (His son is a friend of Noland's and of mine — he's
President of the YMCA board on which I replaced Noland in January. The new
minister is an important banker and owner of the Quito distributorship for
Chevrolets and Buicks. Noland intends to begin a liaison arrangement with him
as soon as possible.)

Today new anti-communist demonstrations and marches were held in Quito
and down south in Loja celebrating the break with Cuba. The Conservatives and
Social Christians are promoting still another massive demonstration in three days
to show support for the Cardinal — in spite of the admission by the bombers
(which in the newspapers was relegated to a small, obscure notice).

Quito 2 April 1962

Success at last. Today the new Cabinet, in its first meeting with Arosemena,
voted unanimously to break relations with Cuba, Czechoslovakia and Poland
(which just recently sent a diplomatic official to Quito to open a Legation). After
the meeting Arosemena lamented that the plebiscite was impossible while Liberal
Party leaders claimed credit for the break.

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Tomorrow the Foreign Ministry will give formal advice to each mission.
Besides the Pole there are three Czechs and seven Cubans. The main problem for
the Foreign Ministry is to find a country with an embassy in Havana that will
take the asylees in the Ecuadorean Embassy — almost two hundred of them. The
extreme left has been trying to promote demonstrations against the decision but
they've only been able to get out small crowds.

This afternoon we had a champagne victory celebration in the station, and
headquarters has sent congratulations.

Quito 4 April 1962

The Social Christian and Conservative street demonstration today was said to
be the largest in the history of Quito. Tens of thousands swarmed through the
downtown streets to the Independence Plaza where the Cardinal, who was the
last speaker, said that, following the teachings of Christ, he would forgive the
terrorists who had tried to kill him. Aurelio Davila was one of the organizers of
the demonstration, and he arranged for a Cuban flag to be presented to the
Cardinal by a delegation of the exiles. (The main exile organization, the
Revolutionary Student Directorate, is run by the Miami station and in some
countries the local representatives are run directly by station officers. In our case,
however, Noland prefers to keep them at a distance through Davila.)

Noland is already meeting with the new Minister of Government, Alfredo
Albornoz, J to pass information on communist plans that we get from our
penetration agents. Today we got a sensational report from one of Jose Vargas's
sub-agents to the effect that Jorge Ribadeneira, one of the principal leaders of
URJE, has called his followers into immediate armed action in a rural area
towards the coast. Communications with the sub-agent are very bad right now
but Noland is trying to get more details. When Noland met with the Minister he
learned that the Minister also has information on the guerrilla operation — it's
concentrated near Santo Domingo de los Colorados, a small town a couple of
hours' drive towards the coast from Quito. Tonight the Ministry of Defense is
sending a battalion of paratroopers to the area to engage the guerrillas. As a
precaution the Minister has banned all public demonstrations until further notice,
but he and the Minister of Defense hope to keep the guerrilla operation secret
until the size of the group is known. That may be impossible, however, because

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other agents including Lt. Col. Paredes, J the surveillance team chief, are
beginning to report on the paratroopers' mobilization.

The thought of facing an effective guerrilla operation is one of our most
persistent nightmares because of the ease with which communications and
transport between coast and sierra could be cut. The difficult geography,
moreover, is ideal for guerrilla operations in many areas, and if the imagination
of the rural Indians and peasants could be captured — admittedly not an easy task
because of religion and other traditional influences — the guerrillas would have a
very large source of manpower for support and for new recruits. This is why we
have been continually trying to induce government action against the various
groups of the extreme left in order to preclude this very situation.

Quito 5 April 1962

Communications are impossible with Jose Vargas's agent in the guerrilla
band and little news of substance is coming into the Ministry of Defense from the
operations zone. I sent Lieutenant- Colonel Paredes down to Santo Domingo to
see what he could pick up, but he hasn't been able to get close to the operations.
Our best information from the Ministry of Defense is coming from Major Ed
Breslin, J the US Army Mission Intelligence Advisor. He has been in Quito only
a short time but has already worked his way in with the Ecuadorean military
intelligence people much more effectively than his predecessor. Both Noland and
I have been working more closely with him on targeting for recruitments in the
military intelligence services, and our relationship with him is excellent — he
trained the tank crews that landed at the Bay of Pigs last year. Breslin reports the
guerrillas are offering no resistance and that several arrests have been made.

At the Guayaquil airport last night two events related to Cuba will give us
good material for propaganda. First, an Ecuadorean returning from a three-month
guerrilla training course in Cuba was arrested. He is Guillermo Layedra, a leader
of the CTE in Riobamba, whose return was reported to the base by the Mexico
City station which gets very detailed coverage of all travellers to and from Cuba
via Mexico through the Mexican immigration service. Data on Layedra's travel
was passed to Lieutenant- Colonel Pedro Velez Moran, J one of the liaison agents
of the base. Of propaganda interest are the books, pamphlets, phonograph records
of revolutionary songs and, especially, a photograph of him in the Cuban militia

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uniform. Through Velez the base expects to get copies of his interrogation and
will pass questions at headquarters' request.

The other case, also the work of Lieutenant-Colonel Velez, occurred during a
refuelling stop of a Cuban airliner bound from Chile to Havana. It was carrying
some seventy passengers most of whom were Peruvian students going to study
on 'scholarships' in Cuba — most likely they were really guerrilla trainees. The
base asked Velez to get a copy of the passenger list, an unusual demand for a
service stop, which the base will forward to the Lima station. During the stop,
however, the pilot was seen to give an envelope to the Third Secretary of the
Cuban Embassy in Quito (the Cubans haven't left yet) and a customs inspector
demanded to see the envelope. The Cuban diplomat took out a .45 pistol and,
after waving it menacingly at the customs inspector, he was arrested by the
airport military detachment. Only about 1 0 a.m. this morning was he allowed to
go free, but he was allowed to keep the envelope.

Quito 6 April 1962

The press carried its first stories of the Santo Domingo guerrilla operation
this morning — sensational accounts of 300 or more men under the command of
Araujo. The Ministry of Defense, however, announced later that thirty guerrillas
have been arrested along with a considerable quantity of arms; ammunition and
military equipment. First reports from interrogations indicate that the guerrilla
group numbers less than 100 and that Araujo isn't participating, but military
operations continue.

Although the early interrogation reports also indicate that the guerrilla
operation was precipitated by the Cuenca revolt and very poorly planned, we will
try to make it appear serious and dangerous in our propaganda treatment. Most of
those arrested are young URJE members — followers of Jorge Ribadeneira who
may well be expelled from the PCE if, as is likely, the Executive Committee
under Saad had nothing to do with the operation. Reports from PCE agent
penetrations coincide in the view that Ribadeneira was acting outside party
control.

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Quito 10 April 1962

The Santo Domingo guerrilla affair is wiped up. Forty-six have been
captured with only a brief exchange of fire. Only one casualty occurred — a
guerrilla wounded in the foot. All have been brought to Quito and we're getting
copies of the interrogations through Major Breslin. In an effort to help Pacifico
de los Reyes J make a good impression in his new job as chief of the intelligence
department of the National Police, I have been giving him information on many
of those arrested, which he is passing as his own to the military interrogation
team.

Propaganda treatment is only partly successful. The Minister of Defense has
announced that the weapons seized are not of the type used by the Ecuadorean
Army and must have been sent from outside the country — although the truth is
that the weapons are practically all conventional shotguns, hunting rifles and
M-l's stolen from the Army. Interrogation reports released to the press allege
(falsely) that the operation was very carefully planned and approved at the PCE
Congress held last month.

Press comment, however, is tending to romanticize the operation.
Participation of four or five girls, for example, is being ascribed to sentimental
reasons. Those arrested, moreover, once they have been turned over to police and
are allowed to see lawyers, are saying that they only went to Santo Domingo for
training in the hope of defending the Arosemena government from overthrow by
the Cuenca garrison. The FEUE has set up a commission of lawyers for the
guerrillas' defence, and unfortunately the early public alarm is turning to
amusement and even ridicule.

Of continuing importance will be two factors. First, the ease with which the
guerrillas were rolled up has given the Ecuadorean military new confidence and
may encourage future demands for government suppression of the extreme left.
Second, the operation is bound to exacerbate the growing split on the extreme
left, both inside and outside the PCE, between those favouring early armed action
and those favouring continued long-term work with the masses. In both cases this
pitiful adventure has been fortunate for us.

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Quito 23 April 1962

Back in the cool thin sierra air after a brief holiday. The Pole, Czechs and
Cubans have all left so we have no hostile diplomatic missions to worry about
any more. The telephone tap on the Cubans was only of marginal value because
they were careful, but I'm going to begin soon to monitor Araujo's telephone and
perhaps one other if I can arrange for transcription. The technical problems with
the sound-actuated equipment were never solved so we reverted to the old
voltage-operated machines.

Although we tried to keep the Santo Domingo guerrilla operation in proper
focus it hasn't been easy. The Rio station helped by preparing an article on the
communist background of one of the girls in the operation, a Brazilian named
Abigail Pereyra. The story was surfaced through the Rio correspondent of the
hemisphere -wide feature service controlled by the Santiago, Chile, station —
Agenda Orbe Latinoamericano. % The story revealed that her father is a Federal
Deputy and the personal physician of Luis Carlos Prestes, long-time leader of the
Communist Party of Brazil, while her mother is the Portuguese teacher at the
Soviet Commercial Mission in Rio de Janeiro. Both parents are leaders of the
Chinese-Brazilian Cultural Society, and her mother went to Cuba early this year
to visit Abigail — who was taking a guerrilla training course, according to the
article. This may help keep her in jail for a while, but public opinion is
favourable to early release.

Gil Saudade has established another of his front organizations for
propaganda. The newest was formed a few days ago and is called the Committee
for the Liberty of Peoples. % Through this group Gil will publish documents of
the European Assembly of Captive Nations % and other Agency-controlled
organizations dedicated to campaigns for human rights and civil liberties in
communist countries. The agent through whom he established the Committee is
Isabel Robalino Bollo J whom he met through Velasco's former Minister of
Labor, Jose Baquero de la Calle. Robalino is a leader of the Catholic Labor
Center (CEDOC), and is Gil's principal agent for operations through this
organization. She was named Secretary of the Committee which includes many
prominent liberal intellectuals and politicians.

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Quito 27 April 1962

The government has lifted the prohibition on public political demonstrations
in effect since the turmoil over the break with Cuba, and the campaign for the
June elections is picking up steam. Quite a number of our agents will be
candidates but so far our main electoral operation is in Ambato where Jorge
Gortaire, a retired Army colonel and Social Christian leader, is working to defeat
the Revolutionary Socialist Mayor running for re-election.

Gortaire is also a leader of the Rotary Club and is President of the Ambato
Anti-Communist Front which we finance through him. Because of his
exceptional capability the Front is running a single list of candidates backed by
the Conservatives, Liberals, Social Christians, independents and, of course, the
fascist ARNE. Noland thinks Gortaire is one of the best agents he has — after
Renato Perez and Aurelio Davila.

Gil Saudade is about to see a giant step forward in his and the Guayaquil
base labour operations. Tomorrow the constituent convention of the free trade-
union confederation to be called CEOSL J begins, and Gil is fairly certain that
between the base agents in CROCLE and his Popular Revolutionary Liberal
Party agents, we will come out in control. In recent months the PLPR agents have
become increasingly active and Gil is counting on them to offset the divisive
regionalism of the CROCLE agents.

Quito 1 May 1962

The CEOSL — Ecuadorean Confederation of Free Trade Union Organizations
- is formally established with several agents in control: Victor Contreras Zuniga J
is President, Matias Ulloa Coppiano J is Secretary for External Relations, and
Ricardo Vazquez Diaz J is Secretary of Education. Publicity build-up has been
considerable, including messages of solidarity from ORIT in Mexico City and
ICFTU and International Trade Secretariats in Brussels. Leaders of other
Agency-controlled labour confederations such as the Uruguayan Labor
Confederation } (CSU) were invited.

The main business of the first sessions was to seek affiliation with the ICFTU
and ORIT which has just opened an important training-school in Mexico. Soon
CEOSL will begin sending trainees to the OR IT school, which is run by the
Mexico City station through Morris Paladino, J the OR IT Assistant Secretary-

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General and the man through whom 10 Division controls ORIT. (The new
Secretary-General of ORIT, Arturo Jauregui, J hasn't been directly recruited yet
although he was here in March to promote the school.)

Gil Saudade will now have to coordinate closely with the Guayaquil base so
that his agents, Ulloa and Vazquez, will work in harmony with the base's agent,
Contreras. None is supposed to know of the others' contact with us.

Unfortunately the controversy between the Guayaquil base agents from
CROCLE and the ECCALICO election operation of two years ago came to a
head. Adalberto Miranda Giron, the Labor Senator from the Coast, was
terminated by the base several months ago because certain of his inappropriate
dealings with companies became known. At the CEOSL constituent convention
he was denounced as a traitor to the working class, the beginning of a campaign
to get him completely out of the trade-union movement.

Quito 3 May 1962

The 'junk swindle' has become Ecuador's scandal of the century and is being
used increasingly by the left to ridicule the military. Today the Chief of Staff and
the Commander of the Army issued a joint statement defending themselves from
attacks by CTE leaders in May Day speeches and other recent attempts to
connect them with the junk swindle. Final liquidation of the armed forces, they
warned, is the purpose of the leftist campaign. Resentment is also growing in the
military over recent leaflets and wall-painting labelling them 'junk dealers'.

A new crisis has developed in rural areas violently demonstrating the
backwardness of this country. For the past two months the government has been
trying to conduct an agriculture and livestock census to aid in economic
planning. Numerous Indian uprisings have occurred because of rumours that the
census is a communist scheme to take away the Indians' animals. On several
occasions there were dead and wounded, as in Azuay Province, for example,
where a teacher and his brother, who were taking the census, were chopped into
pieces with machetes and only the arrival of police impeded the burning of what
remained of their bodies.

Because priests serving rural areas are often responsible for the rumours, the
government had to ask the Church hierarchy to instruct all priests and other
religious to assist in the census wherever possible. In Azuay, nevertheless, the
census has been suspended.

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One has to wonder about the strength of religious feeling here. On Good
Friday two weeks ago tens of thousands of Indians and other utterly poor people
walked in procession behind images from noon till 6 p.m. — despite heavy rain.
The same occurred in Guayaquil and other cities.

Quito 12 May 1962

Some of our agents are running solid electoral campaigns but others have
pulled out for lack of support. Both Jose Baquero de la Calle, ex-Minister of
Labor under Velasco and running as an independent Velasquista, and Juan Yepez
del Pozo, Sr., General-Secretary of the Ecuadorean affiliate of the International
Commission of Jurists, J and running for the Popular Revolutionary Liberal
Party, J declared for Mayor of Quito. When Baquero's candidacy was repudiated
by the Conservative Party, he resigned, and when Yepez failed to attract
significant Velasquista backing, he resigned. Oswaldo Chiriboga, J long-time
penetration of the Velasquista movement, also declared for Mayor but is pulling
out. For all of these candidates station support was only nominal because their
possibilities for success were obviously rather limited.

On the other hand the candidacies of Renato Perez for the Municipal
Council, Aurelio Davila for the Chamber of Deputies and Carlos Arizaga Vega
for Deputies are going very well. Alfredo Perez Guerrero, President of the ICJ $
affiliate and reform-minded Rector of Central University, is heading the Deputies
list of the National Democratic Front (Liberals, Socialists and independents) and
will win without our help. Other candidates of the Social Christian Movement
and the Conservative Party are being financed indirectly through funds passed to
Perez and Davila.

Quito 13 May 1962

Because Arosemena continues to resist firing extreme leftists in his
government — penetration in fact continues to grow — Noland recommended, and
headquarters approved, expansion of the political operations financed through the
EC ACTOR project. Not only will continued and increased pressure be exerted
through the regular agents in Quito, Cuenca, Riobamba, Ambato and Tulcan, but
we have made two new recruitments of important Social Christian leaders in
Quito. I am in charge of both these new cases.

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The first new operation is with Carlos Roggiero, J a retired Army captain and
one of the principal Social Christian representatives on the National Defense
Front. Roggiero is chief of the Social Christian militant-action squads, including
the secret bomb-squad, and I have started training him in the use of various
incendiary, crowd dispersement and harassment devices that I requested from
TSD in headquarters. Through him we will form perhaps ten squads, of five to
ten men each, for disrupting meetings and small demonstrations and for general
street control and intimidation of the Communist Youth, URJE and similar
groups.

The other new operation is with Jose Maria Egas, } a young lawyer and also
a leading Social Christian representative on the National Defense Front. Egas is a
fast-rising political figure and a really spellbinding orator. Through him I will
form five squads composed of four to five men each for investigative work
connected with our Subversive Control Watch List — formerly known as the
LYNX list. The surveillance team under Lt. Col. Paredes simply hasn't the time to
do the whole job and is needed on other assignments. With the group under
Egas's control we will have constant checking on residences and places of work
so that if the situation continues to deteriorate and a moment of truth arrives, we
will have up-to-date information for immediate arrests. If Egas's work warrants
it, we may train him in headquarters and even extend the operation to physical
surveillance.

In another effort to improve intelligence collection on the extreme left I have
arranged to add another telephone tap through Rafael Bucheli J and Alfonso
Rodriguez. { The new tap will be on the home telephone of Antonio Flores
Benitez, a retired Army captain and somewhat mysterious associate of Quito PCE
leader Rafael Echeverria Flores. We have several indications from PCE
penetration agents Cardenas and Vargas that Flores is a key figure in what seems
to be an organization being formed by Echeverria outside the PCE structure
properly speaking. The chances are that Echeverria is developing a group that
may be the nucleus for future guerrilla action and urban terrorism, but he hasn't
yet taken any of our agents into it. I will tap Flores for a while to see if anything
of interest develops — Edgar Camacho will do the transcribing as Francine
Jacome has only time for transcribing the Araujo line. The LP remains in
Bucheli's home under the thin cover of an electronics workshop.

Raymond Ladd, J our hustling administrative officer, has been very active in
the basketball federation, teaching a course in officiating and helping to coach the

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local girls teams. Through this work he met Modesto Ponce, J the Postmaster-
General of Ecuador, who soon insisted that Ladd review in the Embassy all the
mail we are already getting through the regular intercept. In order to avoid
suspicion that we are already getting mail from Cuba and the Soviet Bloc, Ladd
accepted Ponce's offer, and now we get the same correspondence twice. We may
attempt certain new coverage through Ponce so Ladd has begun giving him
money for the mail under the normal guise of payment for expenses.

Quito 21 May 1962

Arosemena struck back for his humiliation at the hands of the military when
he was forced to break with Cuba. Last week he fired the Minister of Defense,
sent the Army Commander to Paris as military attache and sent the Air Force
Commander to Buenos Aires as military attache. Immediate protests came from
the Social Christians, Conservatives and others over the removal of these
staunchly anti-communist officers with new charges of communist penetration of
the government.

Then Alfredo Albornoz, J the Minister of Government appointed only seven
week ago, resigned. Next, all the other National Democratic Front Ministers
resigned. The issue is Arosemena's refusal to honour his promise of last month,
when the Front came into the government, to dismiss two key leftist appointees:
the Secretary- General of the Administration and the Governor of Guayas
Province.

Noland is sorry to lose Albornoz because they were developing a worthwhile
relationship both from the point of view of intelligence collection through
Albornoz and from action by Albornoz on undesirables within the government.
Arosemena is searching for new support, but the Front is holding out for the
resignations.

But yesterday new ministers were named after Arosemena made another
promise in secret to fire the Governor of Guayas Province. Today the resignation
was announced. Although this is a step in the right direction, the Secretary-
General of the Administration remains (he is like a chief of staff with Cabinet
rank) along with many others of the same colouring. Among the new ministers is
Juan Sevilla, J a golfing companion of mine who was named Minister of Labor
and Social Welfare. Gil Saudade will decide whether Sevilla could be of use in
his labour operations.

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Quito 4 June 1962

Traditional violence flared up in several cities during the final days before
the elections which were held yesterday. The right was split, as were the centre
and the Velasquistas — with a profusion of candidates all over the country
excepting the extreme left which didn't participate.

The Conservative Party won the most seats in the Chamber of Deputies
(although not quite a majority), and victories in most of the municipal and
provincial contests. Aurelio Davila, who managed the Conservative campaign in
Quito, was elected Deputy for Pichincha. ReRato Perez was elected Quito
Municipal Councillor from the Social Christian list. And Carlos Arizaga Vega
was elected Conservative Party Deputy for Azuay Province.

The Velasquistas have had a disaster, winning only six deputies and two
mayors' races — one of which was in Ambato. Jorge Gortaire's candidate there,
backed by the Anti-Communist Front, | was second but Gortaire is being given
overall credit for the defeat of the Revolutionary Socialist incumbent.

The elections are a clear indication of the effectiveness of the Conservatives'
campaign against communist penetration in the government and are a severe
defeat both for Arosemena and for the National Democratic Front. When
Congress opens there can be little doubt that the Conservatives will exert new
and stronger pressure for elimination of extreme-leftists in the government.

Reinaldo Varea has been taking a severe beating in the continuing
controversy over the junk swindle. The case is colouring the whole political
scene and unfortunately for us Varea isn't very effective in what is a very difficult
defence. In a few days he'll go to Washington for treatment of stomach ulcers at
Walter Reed Hospital — Davila will be acting Vice-President.

Quito 15 June 1962

The International Monetary Fund has just announced another stabilization
credit to Ecuador of five million dollars over the next twelve months for balance
of payments relief. The announcement was optimistic and complimentary, noting
that Ecuador since mid- 1961 has stopped the decline in its foreign exchange
reserves and obtained equilibrium in its balance of payments. The new standby,
of course, is conditional on retention of last year's exchange-rate unification, that
contributed to Velasco's overthrow.

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Two programmes are getting under way this month as part of a new US
country-team effort in staving off communist-inspired insurgency One is the
Civic Action programme of the Ecuadorean military services and the US military
assistance mission — in fact under way for a couple of years but now being
expanded and institutionalized. The purpose of Civic Action is to demonstrate
through community development by uniformed military units that the military is
on the side of the people so that tendencies of poor people to accept communist
propaganda and recruitment can be reversed. It's a programme to link the people,
especially in rural areas, to the government through the military who contribute
visibly and concretely to the people's welfare.

The Civic Action programme just announced as the first of its kind in Latin
America calls for contributions in money and equipment by the US military-
assistance mission worth 1.5 million dollars plus another 500,000 dollars from
the AID mission. Projects will include road-construction, irrigation-canals,
drinking-water systems and public-health facilities, first in Azuay Province to be
followed by Guayaquil slums and by the Cayambe-Olmedo region north of
Quito. Widespread publicity will be undertaken to propagandize these projects in
other areas in order to generate interest and project proposals in these other
regions.

In the station, we will work with Major Breslin, J the intelligence advisor of
the US military mission. He will use the mission personnel who visit and work at
the projects as a type of scout — keeping their eyes open and reporting indications
of hostility, level of communist agit-prop activities and general programme
effectiveness.

The other new programme is more closely related to regular station
operations and is Washington's answer to the limitations of current labour
programmes undertaken through A I D as well as through ORIT and CIA stations.
The problem is related to the controversy over the ineffectiveness of ORIT but is
larger — it is essentially how to accelerate expansion of labour-organizing
activities in Latin America in order to deny workers to labour unions dominated
by the extreme left and to reverse communist and Castroite penetration. This new
programme is the result of several years' study and planning and is to be
channelled through the American Institute for Free Labor Development {
(AIFLD), founded last year in Washington for training in trade-unionism.

The reason a new institution was founded was that AID labour programmes
are limited because of their direct dependence on the US government. They serve

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poorly for the dirty struggles that characterize labour organizing and
jurisdictional battles. ORIT programmes are also limited because its affiliates are
weak or nonexistent in some countries, although expansion is also under way
through the establishment of a new ORIT school in Mexico. Control is difficult
and past performance is poor. The CIA station programmes are limited by
personnel problems, but more so by the limits on the amount of money that can
be channelled covertly through the stations and through international
organizations like ORIT and the ICFTU.

Business leaders are front men on the Board of Directors so that large sums
of AID money can be channelled to AIFLD and so that the institute will appear to
have the collaboration of US businesses operating in Latin America.
Nevertheless, legally, AIFLD is a non-profit, private corporation and financing
will also be obtained from foundations, businesses and the AFL-CIO.

The AIFLD is headed by Serafino Romualdi, 10 Division's longtime agent
who moved in as Executive Director and resigned as the AFL-CIO's Inter-
American Representative. Among the Directors are people of the stature of
George Meany, J J. Peter Grace } and Joseph Beirne, J President of the
Communications Workers of America J (CWA) which is the largest Western
Hemisphere affiliate of the Post, Telegraph and Telephone Workers International
J (PTTI). AIFLD, in fact, is modelled on the CWA training school of Front
Royal, Virginia where Latin American leaders of PTTI affiliates are being
trained. Day to day control of AIFLD by 10 Division, however, will be through
Romualdi and William Doherty, } former Inter-American Representative of the
PTTI and now AIFLD Social Projects Director. Prominent Latin American
liberals such as Jose Figueres, } former President of Costa Rica and also a
longtime Agency collaborator, will serve on the Board from time to time.

The main purpose of AIFLD will be to organize anti-communist labour
unions in Latin America. However, the ostensible purpose, since union
organizing is rather sensitive for AID to finance, even indirectly, will be 'adult
education' and social projects such as workers' housing, credit unions and
cooperatives. First priority is to establish in all Latin American countries training
institutes which will take over and expand the courses already being given in
many countries by AID. Although these training institutes will nominally and
administratively be controlled by AIFLD in Washington, it is planned that as
many as possible will be headed by salaried CIA agents with operational control
exercised by the stations. In most cases, it is hoped, these AIFLD agents will be

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US citizens with some background in trade-unionism although, as in the case of
ORIT, foreign nationals may have to be used. The training programmes of the
local institutes in Latin America will prepare union organizers who, after the
courses are over, will spend the next nine months doing nothing but organizing
new unions with their salaries and all expenses paid by the local institute.
Publicity relating to AIFLD will concentrate on the social projects and 'adult
education' aspects, keeping the organizing programme discreetly in the
background.

This month, in addition to training in Latin American countries, AIFLD is
beginning a programme of advanced training courses to be given in Washington.
Spotting and assessment of potential agents for labour operations will be a
continuing function of the Agency-controlled staff members both in the training
courses in Latin America and in the Washington courses. Agents already working
in labour operations can be enrolled in the courses to promote their technical
capabilities and their prestige.

In Ecuador, the AIFLD representative from the US who is now setting up the
training institute — the first course begins in three weeks — is not an agent but was
sent anyway in order to avoid delays. However, Gil Saudade arranged for
Ricardo Vazquez Diaz, J the Education Secretary of CEOSL, to be the
Ecuadorean in charge of the local AIFLD training programmes. Carlos Vallejo
Baez, J who is connected with the Popular Revolutionary Liberal Party, J will
also be on the teaching staff. Eventually Saudade will either recruit this first
AIFLD representative or headquarters will arrange for a cleared agent to be sent.

These two new programmes, military Civic Action and the AIFLD, are
without doubt being expanded faster here than in most other Latin American
countries. Recently I read the report by a special inter-departmental team of
experts from Washington called the Strategic Analysis Targeting Team (SATT),
which in months past secretly visited all the Latin American countries. Their
purpose was to review all US government programmes in each country and to
determine the gravity of the threat of urban terrorism and guerrilla warfare. We
prepared a secret annex for the SATT Report, and among their recommendations
were expansion of the Subversive Control Watch List programme and updating
of contingency planning in order to continue our operations from a third country
— in case we lose our Embassy offices. Ecuador, in fact, shared with Bolivia and
Guatemala the SATT Report's category as the most likely places for early armed

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insurgency. Emphasis on immediate expansion of Civic Action and labour
programmes is probably a result of the SATT Report.

Quito 21 July 1962

A breakthrough in Guayaquil student operations. The anticommunist forces
led by Alberto Alarcon have just won the FEUE J elections. They replace
extreme-leftist officers who are members of URJE. Less than two weeks ago,
Alarcon was here in Quito for a golf tournament sponsored by Ambassador
Bernbaum, and he and Noland made final preparations for the FEUE elections.

Gil Saudade has launched another new operation — an organization of
business and professional people to promote economic and social reform. Civic
organizations of this sort have been established by other stations and have been
effective for propaganda and as funding mechanisms for elections and other
political-action operations. Our group is called the Center for Economic and
Social Reform Studies J (CERES) and is headed by two agents, Mario Cabeza de
Vaca J and Jaime Ponce Yepez. } Cabeza de Vaca formerly was the cutout to
PCE penetration agent Mario Cardenas but they had a personality clash of sorts
so John Bacon shifted Cardenas to Miguel Burbano de Lara J who was already
handling another PCE penetration agent, Luis Vargas. J Bacon then turned
Cabeza de Vaca over to Saudade to front in the CERES organization. Jaime
Ponce is the Quito Shell Oil dealer and already a friend of mine and Noland's.
Noland recruited him to work in CERES and then turned him over to Saudade.
The Bogota station is helping by sending a delegation from its reform group
called Center of Studies and Social Action J (CEAS). They are here now.

Quito 2 August 1962

Arosemena's back from a state visit to Washington. During his main business
meeting with Kennedy he was feeling no pain and proved he could name all the
US Presidents in order from Washington on. He also claimed he couldn't
remember the Ecuadorean Presidents, there have been so many, for the last half-
century. Kennedy apparently was amused, but the State Department reports on
the trip are sombre.

Thanks to Arosemena the last of the Santo Domingo guerrillas have been
released. In recent months they've trickled out slowly with little publicity, and

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unless Davila and others can create an issue during the Congressional session
opening in a week, the cases will just sink away into the bureaucratic swampland.
Several of the guerrillas have already gone to Cuba for additional training.

The telephone tap on Antonio Flores Benitez is producing better information
right now than any of our PCE penetration agents. Flores has ten or fifteen
persons who call and say very little, only code -phrases for arranging meetings,
obviously using code-names. Using the ECJACK surveillance team under Lt.
Col. Paredes I've been trying to identify Flores's contacts but the work is very
slow, especially because Flores simply cannot be followed — partly it's the size
and low proficiency of the team, but, mainly Flores is watching constantly and
taking diversionary measures.

Even so, I have identified Rafael Echeverria, Principal PCE leader in Quito,
as one of the clandestine contacts, along with a non-commissioned officer in the
Ministry of Defense Communications Section, the chief of the archives section of
the Presidency and the deputy chief of Arosemena's personal bodyguard.
Analysis of the transcripts has been most helpful because even though Flores is
careful when he speaks by telephone, his wife is very garrulous when he's out of
the house. Several important identifications have been made from her
carelessness.

My impression at this point is that Flores, who is not a PCE member, is in
charge of the intelligence collection branch of an organization Echeverria is
continuing to form outside the established PCE structure. If he is doing as well in
the guerrilla and terrorism branch we will have to act soon to suppress the
organization before armed operations begin.

In order to speed up transcriptions we have brought in another transcriber. He
is Rodrigo Rivadeneira, J one of the brothers who run the clandestine printing
press. Rodrigo is one of Ecuador's best basketball players and was on a
scholarship in the US obtained for him by Noland. He returned to Ecuador in
June and because of family financial problems he will probably have to give up
the scholarship. Francine Jacome will be unable to work for a few months so
Rodrigo will take over the Araujo line which, while interesting, is not producing
as much as the Flores line.

Two police agents have been transferred to new assignments. Pacifico de los
Reyes, J Chief of Police Intelligence, left yesterday for the FBI course at
Quantico, Virginia. We got the scholarship for him through the AID Public Safety
office and he will be gone until the end of the year. Before he left he asked me if

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I would like to keep up contact with the Police Intelligence unit while he is away.
He selected Luis Sandoval, J chief technician of the Police Intelligence unit, with
whom I have been meeting since last year but without de los Reyes's knowledge.
He introduced Sandoval to me three days ago and somehow we both kept a
straight face. Before leaving, de los Reyes was promoted from captain to major.
With the Office of Training in headquarters I am arranging special intelligence
training for him to follow the FBI course.

Colonel Oswaldo Lugo, our oldest and most important penetration agent of
the National Police, has been reassigned from the Cuenca district to the job as
Chief of the Fourth District with headquarters in Guayaquil. This new job puts
him in command of all the National Police units on the coast and will be an
important addition to the Guayaquil base operations. In a few days I will make a
quick trip to Guayaquil to introduce Lugo to the Base Chief.

Guerrilla training in Cuba is on headquarters' highest priority list for Latin
America and instructions have been sent to all stations asking that efforts be
made to place agents in the groups sent for training. We haven't been able to get
an agent sent for training yet, but I've been meeting lately with the new Director
of Immigration, Pablo Maldonado, J who has expressed interest in helping
impede travel to Cuba by administrative procedures where prior knowledge of
the travel is available. Maldonado, whom I met through mutual friends, is also
willing to arrange close searches of Ecuadoreans who return from Cuba. I have
begun passing on information which comes from the Mexican and Spanish
liaison services using the immigration documents of travellers to and from Cuba
through the two main travel points: Mexico City and Madrid.

Quito 10 August 1962

Congress opened a new session today and acknowledged that agrarian reform
is one of the first items on its order of business. In the Senate the National
Democratic Front is in control while in the Chamber of Deputies the
Conservative Party has a slight edge when backed by the leftist Concentration of
Popular Forces' two or three deputies.

The Conservatives are out to get Varea's } resignation and Noland has no
way either to stop it or to salvage Varea. Once Varea is thrown out over the junk
swindle the Conservatives will try to get Arosemena thrown out or force his

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resignation for physical incapacity. Unfortunately Varea has to go first because
ousting Arosemena with Varea as Vice-President will be almost impossible.

Varea continues as President of the Senate and Carlos Arizaga Vega, J our
ECACTOR political-action agent from Cuenca, was elected Vice-President of the
Chamber of Deputies. He has quickly replaced Davila as leader of the rightist
bloc — Davila is concentrating on organizational work and wasn't a candidate in
the Chamber of Deputies.

Quito 29 August 1962

After four days of political crisis, including the resignations of all Cabinet
ministers, Arosemena finally had to dismiss his leftist Secretary-General. Without
doubt this is a significant victory for the Conservatives and Social Christians,
although certain Liberals and Socialists are also aligned in the campaign since
last year against the key administration leftist.

The only other Cabinet resignation accepted was that of Manuel Naranjo, }
Minister of the Treasury and Noland's agent leading the democratic Socialist
Party. His resignation comes as a result of increasing opposition from
businessmen to his austerity policies although he is widely and favourably
recognized for his personal honesty and the beginnings of tax-reform.

The situation worsens for another of Noland's agents. Two nights ago the
Chamber of Deputies voted to impeach Varea for his participation in the junk
swindle — still the supreme issue in current Ecuadorean politics. He's not being
charged with stealing any of the money, just with negligence and ineptitude. The
Minister of Defense at the time of the swindle is being prosecuted by the
Chamber along with the Vice-President. Carlos Arizaga Vega is leading the
attack.

Araujo has arrived back in Guayaquil after a trip to China that started late
last month. At the airport five rolls of training film on street-fighting techniques
were confiscated as well as propaganda. In China he was received by the Vice-
Premier — we're going to try and discover if he got other assistance too.

Quito 3 September 1962

Labour operations proceed with their usual mixed accomplishments. The
CROCLE leadership within the CEOSL has insisted in attacking Adalberto

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Miranda, the Labor Senator from the coast, because of his dealings with the
Guayaquil Telephone Company. Now they are accusing him of being involved
with efforts by the United Fruit subsidiary to fire certain employees who are
members of the subsidiary's trade union which recently affiliated with CROCLE
and CEOSL. The same Guayaquil CROCLE leaders tried to get Miranda
disqualified from the Senate but that move failed too. This campaign against
Miranda is justified in some ways, according to the base, but undesirable right
now because of its divisive nature. Soon the base plans to terminate the CROCLE
agents who also insist on retaining the regional identity of CROCLE in
opposition to our efforts to replace it with coastal provincial federations. When
that happens, Gil Saudade will move his Quito agents into full control of
CEOSL; he is now preparing for that development.

Meanwhile the AIFLD programme is continuing to progress with close
coordination with CEOSL through Ricardo Vazquez Diaz. Next month Vazquez
will conduct a seminar for labour leaders from which four will be selected for the
three-month AIFLD course starting in October in Washington.

Two weeks ago a PTTI delegation was here to discuss organization and a
low-cost housing programme with their Ecuadorean affiliate, FENETEL, J which
is one of the most important unions in CEOSL. The PTTI is training FENETEL
leaders at their school in Front Royal, Virginia, and the visit was also used to
create publicity for the AIFLD seminar programme. Included in the delegation
was the new PTTI Inter- American Representative and a Cuban who is leader of
the Cuban telephone workers' union in exile. This PTTI organization is without
doubt the most effective of the International Trade Secretariats currently working
in Ecuador under direction of 10 Division.

One has to wonder how the Ecuadorean working class can even stay alive to
organize. Two weeks ago the President of the National Planning Board, in a
general economic report to the Chamber of Deputies, revealed that the worker in
1961 received an average monthly income of only 162 sucres — about seven
dollars.

Quito 10 September 1962

Noland has turned over another branch of the ECACTOR political-action
project to me. From now on I'll be handling the Ambato operation with Jorge
Gortaire.

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Two weeks ago I went with Noland down to Ambato to meet Gortaire and to
plan a bugging operation that we think may reveal information on Chinese
support to Araujo, if any. Previously, the manager of the Villa Hilda Hotel in
Ambato, a Czech emigre, reported to Gortaire that Araujo had made reservations
for one of the cottages. This will be Araujo's first trip to visit his Ambato
followers since returning from Communist China and Gortaire suggested that we
bug the cottage — which he will monitor when Araujo goes there at the end of the
month.

Last week-end I returned with the equipment and spent a couple of days with
Gortaire. He had taken the cottage which Araujo will use and we installed a
microphone, transmitter and power supply behind the woodwork of the closet
door. It works perfectly and Gortaire can monitor at ease from his house, which is
only two blocks from the Villa Hilda. The only problem was that Gortaire forgot
to lock the door and, when I was standing on a table in the closet making the
installation, a couple of maids burst in on us. They were clearly puzzled by my
strange activity, but Gortaire believes they simply could not imagine what I was
really doing. He will stop by to see the manager from time to time to find out if
the maids mentioned seeing me on the table.

Quito 3 October 1962

Arosemena has survived another attempt at impeachment for incapacity,
largely because the Conservatives fell apart on the issue, and because Varea is so
discredited.

Through my work with Pablo Maldonado, J Director of Immigration, on
attempting to stop or delay Ecuadoreans from travelling to Cuba and to carefully
review their baggage on return, I have met the Sub-Secretary of Government,
Manual Cordova Galarza, } who is Maldonado's immediate superior.

Cordova expressed willingness to cooperate in trying to cut off travel to
Cuba, and he said Jaime del Hierro, } the Minister of Government, is also
anxious to see effective controls established. He added that any time I wish, I can
call on him or on the Minister to propose new ideas.

Noland isn't anxious to get involved with Cordova or del Hierro because,
according to him, Arosemena won't allow them to take really, effective action. He
said they are probably just trying to appear to be cooperative since serving as
Minister and Sub- Secretary of public security in this government is beyond

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redemption. In his view they're like the other Liberals serving Arosemena:
disgraceful opportunists. For the time being I'll continue with Maldonado and
avoid contacts with Cordova and del Hierro.

Today Cordova went to Cuenca to investigate a macabre incident that
occurred in an Indian village about twenty kilometres outside Cuenca. A medical
team of the Andean Mission, an organization supported by UN agencies and
dedicated to teaching social progress and self-help to rural Indians in several
countries, was making the rounds of villages when they encountered strange
hostility just outside a community they had already visited several times. They
stopped the jeep and the doctor and social-worker proceeded on foot leaving the
nurse and chauffeur in the vehicle. In the village the doctor and the social-worker
found the Indians assembled in the church for a religious service, but when they
entered the church they were greeted with extreme hostility by the Indians who
began to jostle them about. When they did not return for some time the nurse also
left the jeep and entered the village, but at the church she too was menaced as she
joined the others. By now the Indians were whipped into a rage by several of
their leaders who thought the Andean Mission people were communists. As
matters grew worse the Mission team fled to the sacristy for safety but were
followed by the Indians who surrounded them and would not let them leave. The
elderly priest, who had been in the parish thirty-eight years, appeared and the
team begged him to confirm to the Indians that they were not communists, but
were simply there to help them. The priest refused to intervene even as the team
knelt before him begging protection, and he simply blessed them and
disappeared. The team was then severely beaten — the nurse left for unconscious
while the doctor and the social-worker were dragged to the street.

The nurse escaped, returned to the jeep and obtained a police patrol from
Cuenca. When they returned to the village the doctor and social-worker had been
killed with stones, clubs and machetes while a local schoolteacher who tried to
intervene had also been attacked. The Indians, in fact, were about to burn him,
thinking he was dead, when the nurse and police arrived.

Preliminary investigation revealed that the priest had earlier instructed the
Indians to resist the agriculture and livestock census because it was a communist
plot, and that the priest also spread the story that the Andean Mission team were
communists. My friends tell me that the priest will probably be sent to a religious
retirement house as punishment.

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Arosemena rewarded Manuel Naranjo J by naming him Ecuadorean
permanent delegate to the UN General Assembly. He has gone to New York and
Noland has arranged for contact to be established with him by officers from the
Agency's New York office. We expect that the CIA will try to use him for special
operations at the UN.

Quito 7 October 1962

Brazilian elections are being held today as the climax of one of WH
Division's largest-ever political-action operations. For most of the year the Rio de
Janeiro station and its many bases in consulates throughout the country have been
engaged in a multimillion dollar campaign to finance the election of anti-
communist candidates in the federal, state and municipal offices being contested.
Hopefully these candidates will become a counter-force to the leftward trend of
the Goulart government — increasingly penetrated by the communists and the
extreme left in general.

**#

Noland's transfer back to Washington, expected by him for many months, is
now official. After five years here he is being replaced in December by Warren L.
Dean, J currently Deputy Chief of Station in Mexico City. No one here knows
anything about the new chief except that he's a former FBI man who wants
Noland to arrange for immediate release of his dogs, that are coming on the same
flight from Mexico City.

Quito 15 October 1962

The Santo Domingo guerrilla adventure has reached a conclusion as far as
the PCE is concerned. At a Central Committee Plenum just ended Jorge
Ribadeneira was expelled from the party for his 'divisionist' work in URJE and
for leading PCE and JCE members into the guerrilla operation. The expulsion
was in agreement with a resolution of the Pichincha Provincial Committee
following their investigation in August. Ribadeneira was an alternate member of
the Central Committee and a full member of the Pichincha Provincial Committee

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under Rafael Echeverria. Our PCE agents report that the struggle will now turn to
URJE where the Ribadeneira forces are struggling with the forces controlled by
the PCE and Pedro Saad. One can only wonder what the Central Committee
would think of Echeverria' s parallel activities outside the PCE as reports continue
to reveal preparations by his group for armed action and terrorism. This comes
through the ECWHEAT telephone tap on Antonio Flores.

I continue working with my two Quito Social Christian leaders, Carlos
Roggiero and Jose Maria Egas, in their respective fields of militant action and
subversive watch-control. Egas has been under rather intense cultivation by the
chief of the Embassy political section (ostensibly my boss) who doesn't know he
is my agent. Egas has just left on a State Department leader grant to observe the
US electoral campaign. He'll spend most of his time in California but after the
elections he'll return to Washington where headquarters will give him a month of
intense training in clandestine operations, mainly surveillance and investigations.

Velasco is again beginning to haunt the political scene and the spectre of his
return for the 1 964 elections looms not far over the horizon. Through the Agenda
Orbe Latinoamericano % news service we arranged to have Velasco interviewed
recently in Buenos Aires, and he affirmed his plans to return in January 1964 for
the campaign. Publication of the interview here has caused just the ripple we
want so that the ECACTOR agents will begin plotting to keep him from returning
or from being a candidate.

Noland has a new Velasquista agent who began calling on him at the
Embassy some weeks ago to offer tidbits on organizational work of Velasquista
leaders in Quito. The new agent is Medadro Toro % and he has Noland extremely
nervous because of his reputation as a gunman. He was one of the four people
arrested for firing at Arosemena during the shoot-out in the Congress in October
last year, and he was jailed from then until February when the Supreme Court
threw out the case. He was back in jail in April for insulting Arosemena and in
May he was a Velasquista candidate for Deputy in the June elections. He lost and
is obviously looking for some way to keep body and soul together. So far his
information has helped resolve persistent rumours of Velasco's imminent return
and Noland, although personally fearing this man, thinks he has long-range
potential. What bothers Noland are Toro's beady eyes looking through him, but
he'll either have to begin discreet meetings outside the Embassy very soon or
forget the whole thing. Politically Toro is dynamite.

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Gil Saudade is trying to salvage his Popular Revolutionary Liberal Party J
(PLPR), although several of the agents are now firmly entrenched in the CEOSL
labour organization. After the fall of Velasco the struggle resumed in the PLPR
between our agents and a group of extreme-leftists who were close to Araujo,
coming to a head last week with the expulsion of Araujo's friends. Now Gil will
try to get his agents active again in the organization, again to attract the
Velasquista left away from Araujo, so that the PLPR will have some influence if
Velasco returns for the 1964 election campaign.

Quito 6 November 1962

At long last Reinaldo Varea's impeachment proceedings, which have
dominated the political scene since August, have ended. Today he was acquitted
by the Senate although Velasco's Minister of Defense at the time of the junk
swindle lost his right to hold public office for two years. Varea may have
survived as Vice- President but his political usefulness is practically wiped out.
The only hope is for him to work very hard to rebuild his reputation so that when
Arosemena's next drunken scandal occurs Varea might not be such an obstruction
to ousting Arosemena for physical incapacity. Even so, there is little or no
indication that Varea could ever overcome the Conservative and Social Christian
opposition to him — he is, after all, a Velasquista.

Quito 8 November 1962

Congress's final session last night kept tradition intact. In addition to a
fistfight involving Davila, the national Budget was adopted. Discussion of the
Budget only began yesterday and was, of course, shallow and precipitate. There
is a general agreement that it will be very difficult to finance in spite of new tax
measures.

The 1962 Congressional session, as in 1961 and 1960, ended with no
agrarian, tax or administrative reform. The session was controlled by the
Conservatives and Social Christians who sought to use the Congress as a political
forum, with the junk scandal as the issue, to attack both the Arosemena
administration and the Velasquista movement. Significant legislation was never
seriously considered.

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Quito 20 December 1962

Another crisis — the worst yet — broke today. President Allesandri of Chile
stopped in Guayaquil this afternoon for an official visit to Arosemena after a trip
to see Kennedy At the airport Arosemena was so drunk he had to be held up by
aides on both sides and later at the banquet he had to call on a guest to make the
welcome toast.

News of this disgrace has spread around the country like a flash and already
Carlos Arizaga Vega is moving to gather signatures for convoking a special
session of Congress to throw Arosemena out. This time Arosemena may well
have to resign.

###

The new Chief of Station arrived with his wife and dogs and next week the
Nolands leave. Today Jim was given a medal by the Quito Municipal Council in
recognition of his work with youth and sports groups in Quito. Renato Perez,
Acting Council President, presided at the ceremony. Tomorrow at the golf-club
the Nolands will be honoured at a huge party, and the following day Janet and I
have invited about a hundred friends to a farewell lawn party for the Nolands at
our house.

Quito 28 December 1962

The Nolands left and the new Chief of Station, Warren Dean, J hasn't wasted
any time letting us know how he works. The other day, even while Noland was
still here, Ray Ladd and I went off to spend the afternoon with a crowd of
friends, mostly from the tourism business, at a bar and lounge of questionable
respectability called the Mirador (it overlooks the whole city). The next day Dean
gave us a verbal dressing down in a staff meeting and left no doubts he wanted to
know where everyone is at all times. Afterwards Noland gave me another of his
friendly advice sessions, warning me that my wilder habits may not sit well with
Dean and that I'd better be a little more discreet. Frankly I think this new chief is
pulling the old military shakedown technique — a mild intimidation to establish

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authority. Surely, with the extra hours worked at night and on week-ends, an
afternoon taken off now and then is justified.

This new chief is a big man, about six feet four inches and somewhat
overweight. He's obviously having difficulty with the altitude even though he has
come from Mexico City — each afternoon after lunch he sits behind his desk
fighting to keep his eyes open. So far the main changes he has indicated are
increased action against the extreme left in collection of information through
technical operations and new agent recruitments. He also wants me to increase
my work with Major Pacifico de los Reyes, the former Chief of Police
Intelligence who has just returned from training at the FBI Academy in Virginia
and at headquarters, where he was given several weeks training in clandestine
intelligence operations. He's just been appointed Chief of Criminal Investigations
for Pichincha but will continue to oversee the intelligence department.

Jose Maria Egas, the young Social Christian leader, is also back from his
State Department trip and from our special training programme. Dean also wants
me to intensify the use of this agent because headquarters is getting frantic that
serious insurgency may be imminent. Programmes like the Subversive Control
Watch List are getting increased emphasis and Egas's teams are crucial for this
effort. From now on I'll pay him the equivalent of 200 dollars a month, which is
very high by Ecuadorean standards but consistent with Dean's instructions.

Quito 12 January 1963

In Guayaquil last week a national convention of URJE voted to expel Jorge
Ribadeneira and nine other URJE leaders, most of whom were involved in the
Santo Domingo guerrilla operation. The expulsions reflect PC E control of the
convention and the specific charge against those expelled was misuse of 40,000
dollars that Ribadeneira and his group were given by the Cubans for guerrilla
operations around Quevedo rather than Santo Domingo.

The best report on the convention was from a new agent of the Guayaquil
base who is one of the URJE leaders expelled. Although the agent, Enrique
Medina, } will no longer be reporting on URJE the base will try to ensure that he
participates in the organization that these former URJE leaders will now form.

From now on the URJE ceases to be the main danger for insurgency from our
point of view. The most important leaders have been thrown out and now that the
PCE is back in control the emphasis will be on organization and work with the

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masses rather than armed action, not to eliminate, of course, selective agitation
through bombings and street action. Our main concern now will be to monitor
any new organization set up by Ribadeneira and the others who were expelled,
together with improving our penetrations of the Araujo and the Echeverria groups
in Quito. In a few days the base will bring out an appropriate story in the
Guayaquil press on the URJE convention and we'll give it replay here in Quito.
This will be a blow to URJE and to those expelled, since normally they try to
keep these internal disputes quiet. Ribadeneira couldn't have been more effective
for our purposes if he had been our agent.

My year as a director of the YMCA is ending, but now I am going to
organize a YMCA basketball team. Dean has approved the use of station funds
for players' salaries so we will be able to attract some of the best in Quito. We'll
also buy uniforms and bring in shoes from the US by diplomatic pouch. The
station administrative assistant, Ray Ladd, will coach the team. The advantage to
the station is to continue widening our range of contacts and potential agents
through the YMCA, which was only established here a couple of years ago.

Quito 16 January 1963

Reorganization of CEOSL is moving ahead although termination of the old
CROCLE agents by the Guayaquil base required a visit in November by Serafmo
Romualdi, Executive Director of AIFLD and the long-time AFL-CIO
representative for Latin America. The struggle between the old CROCLE { and
COG J agents, who favoured retention of their unions' autonomy within CEOSL,
and our new agents, who insisted (at our instruction) that CROCLE and COG
disappear in favour of a new Guayas provincial federation, finally led to the
expulsion a few days ago of the CROCLE and COG leaders from CEOSL. Those
expelled included Victor Contreras } who only last April became CEOSL's first
President. Matias Ulloa Coppiano is now Acting Secretary-General of CEOs L
and Ricardo Vazquez Diaz is Acting Secretary of Organization. Both are agents
of Gil Saudade who originally recruited them through his Popular Revolutionary
Liberal Party.

Ricardo Vazquez Diaz has been very effective in expanding the AIFLD
education programme along with Carlos Vallejo Baez. J In recent months,
courses have been held in Guayaquil and Cuenca as well as Quito. Other courses

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are being planned for provincial towns in order to strengthen the CEOSL
organizations there.

Quito 18 January 1963

Student election operations through Alberto Alarcon have again been
successful in Quito. In December the elections for officers of the Quito FEUE
chapter were so close that both sides claimed fraud and the voting was annulled.
Today another vote was held and Alarcon's candidate, a moderate, won. The
national FEUE seat is now in Cuenca where anti-communist forces are also in
control.

The Guayaquil base has made several PCE documents public, by having
Colonel Lugo, Commander of the National Police in the coastal provinces, add
them to a three-ton haul of propaganda he captured last October. In a few days
these documents will come to light in the report emerging from a Senate
commission's investigation of the propaganda. Included is the PCE Central
Committee resolution expelling Ribadeneira. Dean is determined to create as
much fear propaganda as possible as part of a new campaign for government
action against the extreme left.

Quito 30 January 1963

Our new station officer under Public Safety cover has arrived and Dean put
me in charge of handling his contact with the station. His name is John Burke J
and he's the most eager beaver I've ever met. Seems to think he'll be crawling in
the attic of the Presidential Palace next week to bug Arosemena's bedroom. His
problem is that he broke his leg training, and while it mended for the past year
and a half he took every training course offered by the Technical Services
Division, for lack of anything else to do. In recent months he has sent to the
station masses of audio, photo and other technical equipment including about 200
pounds of car keys — one for every Ford, General Motors and Chrysler model
built since 1925. Dean finally blew up over this equipment and fired off a cable
telling headquarters not to send one more piece of technical gear unless he
specifically asks for it. Poor Burke. He's not off to a very good start, and Dean
has told me to make him stick exclusively to the AID police work until further
notice. His first AID project, it seems, will be to take a canoe trip down in the

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Amazon jungles to survey rural law enforcement capabilities there - not exactly
clandestine operations but it could get interesting if he runs into any Auca head-
shr inkers.

In fact Burke will have plenty to keep him busy in the straight police work.
Under the Public Safety programme this year AID is giving about one million
dollars' worth of weapons and equipment to the police: 2000 rifles with a million
rounds of ammunition, 500 .38 calibre revolvers with half a million rounds, about
6000 tear-gas grenades, 150 anti-riot shot-guns with 15,000 shells, almost 2000
gas-masks, 44 mobile radio units and 19 base radio stations, plus laboratory and
investigations equipment. In addition to training the national police here in
Ecuador, the Public Safety office is also sending about seventy of them to the
Inter- American Police Academy J at Fort Davis in the Panama Canal Zone. This
Academy was founded by our Panama station last year and is intended to be a
major counter- insurgency facility similar in many ways to the training
programmes for Latin American military officers under the military aid
programmes.

Quito 15 February 1963

Dean is getting more determined each day to avoid a surprise insurgency
situation. He wants to increase coverage of two groups in particular and he wants
me to do most of the work. The two groups, not surprisingly, are those led by
Araujo and Echeverria.

We've had a breakthrough in coverage of the Araujo group through the recent
recruitment of one of his close collaborators, a Velasquista political hack named
Jaime Jaramillo Romero. J Jaramillo was arrested last month with Araujo and
two of the expelled PLPR leaders while recruiting in the provinces. Soon after, he
was a 'walk in' to the Embassy political section, and after being informed by the
State Department officer who spoke with him we decided to make a discreet
contact with him using the non-official cover operations officer of the Guayaquil
base. I arranged for this officer, Julian Zambianco, J to come to Quito and with
automobiles rented through a support agent, Jose Molestina, J Zambianco called
on Jaramillo at his home. A meeting followed in Zambianco's car, which I
recorded in another car from which I was providing a security watch for
Zambianco. Earlier I had rigged the Zambianco car with a radio transmitter to
monitor their conversation. Jaramillo's information looks good — including

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information about an imminent trip by Araujo to Cuba for more money. As Dean
is a great believer in the polygraph I have requested that an interrogator come as
soon as possible to test Jaramillo. If he's clean I'll turn him over to a new cutout
so that we won't have to call Zambianco to Quito for each contact. Telephone
coverage continues on Araujo but it hasn't produced good information.

On the other hand telephone coverage of Antonio Flores Benitez — one of
Echeverria's principal lieutenants — is still providing excellent information. Flores
is obviously getting very good intelligence from his agents in the Ministry of
Defense, the Presidential Palace and the police. Our problem is inadequate
coverage of Echeverria's plans and of his organization for terrorism and guerrilla
warfare, although we are getting some information from Mario Cardenas, one of
our PCE penetration agents who is close to Echeverria. On Dean's instruction I
am studying three new operations for increasing coverage of Echeverria.

First, we will try to install an audio penetration of the Libreria Nueva
Cultura, the PCE bookstore in Quito run by Jose Maria Roura, the number two
PCE leader in Quito and Echeverria's closest associate. The two of them often
meet at the bookstore, which is a rendezvous for PCE leaders in general and
consists of a street-front room on the ground floor of an old colonial house in
downtown Quito. On checking records for the owner of the house I discovered
that it belongs to a golfing companion of mine, Ernesto Davalos. J Davalos has
agreed to give me access and security cover during the audio-installation which
we will make from the room above the bookstore on a Sunday when it is closed.
For a listening post (LP) I hope to obtain an office in a modern, multi-storey
building across the street from the bookstore, where we could also photograph
visitors and monitor the telephone.

Second, we will try to bug Echeverria's apartment. He lives in a fairly new
building in downtown Quito but access for the installation will be difficult. On
the floor beneath his apartment is the Club de Lojanos (the regional club of
people from Loja), from which we might be able to drill upwards to install the
microphone and transmitter. This installation would be very slow and difficult,
especially if we have to do it while Echeverria or his wife are at home, but
Cardenas believes Echeverria has important meetings at home and probably
discusses all his activities with his wife, who is a Czech. I am also checking on
whether I can get an apartment across the street from Echeverria's that would
serve as listening and observation post for this operation.

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The third new operation is another technical installation, this time against
Antonio Flores Benitez. He has recently moved into a modern multi-storey
apartment-building where we might be able to monitor both his telephone and an
audio-installation from the same LP. Although there seems to be little chance for
access to his apartment or to those around it for the installation, an apartment
above and just to the side of his is coming free in a few weeks. I may take that
apartment in order to begin monitoring the telephone from there (rather than from
the LP in Rafael Bucheli's house) and see later whether the audio technicians can
drill to the side and down or whether we will have to make the bugging by
surreptitious entry. Already we know that Flores meets many of his contacts in
his apartment, and he discusses most of his activities with his wife — who gossips
about them by telephone when he's not at home.

On the government side Dean also wants me to intensify my work with Pablo
Maldonado, J the Director of Immigration, and to work into a liaison relationship
with Manuel Cordova, the Sub-Secretary of Government and with Jaime del
Hierro, J the Minister of Government. Although I have avoided until now regular
contact with Cordova and del Hierro (on Noland's instruction last year) picking
up with them now should not be difficult. The reason, Dean said, is to discover
and to monitor their willingness to take action on information we give to them.
Once we determine willingness on the high level, we'll be able to determine more
accurately what information will bring action when passed through police agents
such as Pacifico de los Reyes and Oswaldo Lugo.

With all this technical coverage I'll need some new agents for transcribing,
photographic work and courier duties — but if they work we'll not be surprised by
either Araujo or Echeverria. The team for processing the telephone taps will be
Edgar Camacho and Francine Jacome with Francine as courier. Rodrigo
Rivadeneira can switch to transcribing the new audio penetration and Francine,
will serve as courier for receipt of his material as well. I'll have Francine come by
my house each morning at eight to leave transcripts and pick up any instructions
for the others.

One other effort coming up that could be important: I've given money to
Jorge Gortaire so that he can buy a used Land Rover to make a trip to military
garrisons in the southern sierra and on the coast. The purpose of this trip is for
Gortaire to sound out military leaders on all the rumours going around about a
move against Arosemena while at the same time weighing the predisposition of
the military leaders to such an action, even if the rumours aren't true.

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Quito 1 March 1963

This morning's newspapers give prominent coverage to Mr. McCone's
testimony to the Senate yesterday in Washington on training for guerrilla warfare
in Cuba. The Director mentioned Ecuador as one of the countries from which the
largest number of trainees has been recruited, and he explained how the Cuban
Embassy in Mexico City tries to conceal travel to Cuba by Issuing the visa on a
slip of paper with no stamp in the passport. His report follows another
headquarters' report, issued last month by the State Department, that between
1000 and 1500 Latin American youths were given guerrilla training in Cuba
during 1962.

In commenting on the press reports this morning Dean told me that one of his
operations in Mexico City was the airport travel-control team. There the
passports of travellers to Cuba are stamped by the Mexican immigration
inspectors with 'arrived from Cuba' or 'Departed for Cuba' to make sure the travel
is reflected in the passports. The station there also photographs all the travellers'
passports and with large press-type cameras photographs are taken as they
embark or deplane. Results of the Mexico City travel-control operation are
combined with other data on travel, mostly from the other important routes to
Cuba via Madrid or Prague, for machine processing. In order to intensify
operations with Pablo Maldonado, Dean wants me to pass him copies of the
monthly machine runs on Ecuadoreans travelling to Cuba. In addition, Mexico
City is cabling the names and onward travel data to stations throughout the
hemisphere so that the travellers can be detained or thoroughly searched when
they arrive home. I'll also pass this type of information to Maldonado and use it
as an entree to Cordova and del Hierro.

I tried to get Dean to reveal why he wants me to work with the Minister and
Sub-Secretary, because usually a Chief of Station handles the high-level liaison
contacts. He says he wants me to get the experience now because it will help me
later. He's bitter about Winston Scott, J the Chief of Station in Mexico City. Scott
has very close relations with both the President, Adolfo Lopez Mateos, } and the
Minister of Government, Gustavo Diaz Ordaz. J When Scott left the country
from time to time or went on home leave he made arrangements for
communications to be kept open with the President and the Minister but would
never let Dean make personal contact even though he was Acting COS when
Scott was away.

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Guayaquil 31 March 1963

The best part of being a CIA officer is that you never get bored for long. On
Friday, two days ago, I flew down from Quito to recruit someone I've known for
about a year and whom the Base Chief, Ralph Seehafer, J wants to use as a
cutout to one of his PCE penetration agents. The recruitment went fine and
tomorrow I'll introduce the new agent, Alfredo Villacres, J to Seehafer.

I came down on a Friday so that I could spend the week-end out of the
altitude, but mostly because Alfredo and I usually spend Saturday nights making
the rounds of Guayaquil's sleazy dives. Last night was typical and we left the last
stop about eight o'clock this morning with Alfredo roaring down the unpaved,
pot-holed streets of a suburban shanty town, firing his .45 into the air while his
dilapidated, windowless old jeep station wagon practically shook apart.

This afternoon he called me at the hotel to advise that we had barely escaped
involvement in a new Arosemena scandal. It seems that a few minutes after we
left the 'Cuatro y Media' last night (it had been an early stop and we left about 1
a.m.) Arosemena and his party arrived. The story is all over town now of how
Arosemena and his friends began to taunt the waiters — all are homosexuals there
— finally ordering one of them to put a lampshade on his head. Arosemena took
out the pistol he always carries and instead of shooting off the lampshade he shot
the waiter in the head. No one is certain whether the waiter died or is in the
hospital, but the blame is going to be taken by Arosemena's private secretary,
Galo Ledesma (known to all as 'Veneno' (poison) Ledesma). Ledesma apparently
left today for Panama where he's going to wait to see what happens here. Alfredo
said that if we had' been there when Arosemena and his group arrived we would
have had to stay since it's a small, one -room place and Arosemena always invites
everyone to join his group. I can see the Ambassador's face if that had happened
and my name was included in the story: good-bye Ecuador.

Guayaquil 2 April 1963

I was to have returned to Quito on the first flight this morning but a very
interesting situation suddenly developed yesterday: After introducing Villacres to
the Base Chief over lunch, Seehafer and I returned to the Consulate and had a
visit from the chief of the USIS office. He told us that a young man had come
into the Consulate this morning asking to speak to someone about 'information'

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and was eventually directed to him. The person said he was a Peruvian and that
he had information on the revolutionary movement in Peru and on Cuban
involvement. The us Is chief said the Peruvian was so nervous and distracted that
he is probably a mental case, but Seehafer asked me to see him if I had nothing
better to do. We arranged for the us Is chief to give him my hotel-room number
(the Peruvian was to return to the Consulate in the afternoon), where he would
call in the evening.

The Peruvian came around to the hotel and we talked for two or three hours.
I took copious notes because I know none of the names on the Peruvian scene
and sent off a cable this morning to Lima and headquarters. The Peruvian is
Enrique Amaya Quintana J and is a middle-level militant of the Movement of the
Revolutionary Left (MIR). He has just finished a three months' training course in
Cuba along with several hundred other MIR members. They are all reinfiltrating
to Peru right now, overland from Colombia and Ecuador.

The important aspect of this future agent, if he's telling the truth, is that he
was selected out of the MIR group to receive special training in communications.
He showed me a notebook full of accommodation addresses throughout Latin
America to which secret correspondence will be sent. Moreover, he also showed
me a dictionary that serves as the key to a code system that he will use in secret
writing and radio communications with Havana.

This afternoon we got cables back from both headquarters and Lima
confirming Amaya's status in the MIR and warning us not to let this one slip
away. The MIR is the most important potential guerrilla organization in Peru with
hundreds of people trained in Cuba and with advanced plans for armed
insurgency.

Lima sent a list of questions for Amaya which I'll go over with him tonight.
He really is a case of nerves and won't like working with a tape-recorder but I'm
going to insist we record everything so that we don't have to depend on my notes.
This way I can get more out of him too. It's not going to be easy getting him to
stay with us — what he wants is financial assistance to get his wife and child out
of Peru and to resettle in some other country. He says he became disillusioned
during the training in Cuba, but my guess is that he's lost his nerve now that he's
almost on the battlefield.

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Quito 5 April 1963

This MIR case has people jumping all around headquarters it seems. Not just
the Peruvian and Ecuadorean desks — the Cuban branch and even the Soviet
Russia Division are also getting into the act. As a cutout and handling officer I
brought in Julian Zambianco, } and yesterday Wade Thomas } arrived from
headquarters to take close charge of the case — he's a specialist in CP penetration
operations. Meanwhile I had sessions each day with Amaya on the tape-recorder,
summarizing the results in cables to Lima and headquarters. The guy is definitely
coming clean — everything seems to check out — and yesterday I finally got him
to agree to spending at least a short period back in Peru with his former friends.
From the sound of the cables from Lima, Amaya is going to be their first
important MIR penetration. My participation ended today when I came back to
Quito.

Quito 12 April 1963

A report is just in from Mario Cardenas, one of our best PCE penetration
agents and a close but not intimate associate of Echeverria. Cardenas reported
that Jose Maria Roura, Echeverria's principal lieutenant in Quito, has left for
Communist China where he expects to get payments started that will enable the
Echeverria group finally to begin armed action. Echeverria has told Cardenas to
stand by for travel to Colombia at a moment's notice, so that he can receive
money and documents that Roura, who is very well-known, should not bring into
the country himself.

We discussed in the station whether to advise Jaime del Hierro, the Minister
of Government, or Manuel Cordova, the Sub- Secretary, but for better security
we decided to post a special watch on Roura's return through Juan Sevilla, | the
Minister of the Treasury. Sevilla, who has been a golfing companion of mine for
over a year, jumped at the chance, just as I thought he would, and he assigned his
personal secretary, Carlos Rendon Chiribaga, J to watch for Roura's return at the
Quito airport. Now we can only hope that Roura comes straight back to Quito
with no stop in Colombia so that we're not forced to protect Cardenas. If by
chance we learn that Roura will arrive in Guayaquil, Sevilla can send his
secretary there to await Roura. Meanwhile I'm moving along with the audio
operation against Roura's bookstore and in a couple of days Larry Martin, | the

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audio technician from the Panama station support unit, will arrive to make the
installation.

Besides Roura's trip we are also monitoring for Araujo's return. He is in Cuba
right now and perhaps he too will bring back money, although the chances are
slim that either he or Roura will be so careless as to bring back money on their
persons. So that we can get timely information after his return I've had
Zambianco come up from Guayaquil again to turn over Jaime Jaramillo } to a
new cutout, Jorge Andino, J who is a hotel owner and Ecuador's best polo player.
Andino is another acquaintance from about the time I arrived and he too was
quite willing to help. He'll receive the reports at the hotel but pass them to me at
another business he owns a couple of blocks away. One of the mysteries we're
trying to solve right now is whether there is any close relationship between
Araujo's group and Echeverria's group, because Echeverria has given several
indications that he is in contact with the Cubans.

Medardo Toro, J the Velasquista gunman whom Noland picked up in a
developmental status last year, is now reporting on a regular basis. Dean told me
to get him into the groove so I brought Zambianco into the case in an
arrangement similar to the one we used with Jaime Jaramillo two months ago.
Until I get a good cutout for Toro we'll have to keep it going with Zambianco, but
this way it's very secure. Mainly we want to keep abreast of Velasco's plans to
return for next year's elections. Too bad Toro is so far from Araujo's group.

Quito 14 April 1963

Each day, it seems, a new wave of rumours spreads around the country
signalling the imminent outbreak of guerrilla warfare and terrorism. Partly the
rumours reflect our continuing propaganda campaign to focus attention on
communism in order to provoke a serious crackdown by the government. But
partly the tension is based on real cases such as captures of propaganda by
Colonel Lugo's police in Guayaquil and the recent near-death of a terrorist when
a bomb exploded during a training session. Our worry is that the Ecuadorean
police and military wouldn't be able to cope with a determined guerrilla
movement.

A recent incident underlines our doubts. Two nights ago a Navy logistics ship
was returning from the Galapagos Islands with a group of university students
who had been in the islands on an excursion. A coastal Navy patrol was lurking

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in the darkness just off-shore in wait for an expected incursion by a contraband
vessel. The coastal patrol mistook the logistics ship for the contraband vessel and
a two-hour gun battle between the two Navy ships followed. The coastal patrol
finally called by radio to Guayaquil for help and the Navy communications
centre called off the battle. What was worse was that their firing was so bad that
no serious hits were made during the two-hour battle and only one sailor was
wounded. After arriving in Guayaquil the students spread the story, which was
published in Guayaquil today, but the Navy isn't talking.

When Dean heard this story this morning he told me to get moving faster on
the new technical operations — he said headquarters will get all over us if we get
surprised by Araujo, Echeverria or others, what with the guerrilla movements
already under way in Peru, Venezuela and Guatemala, and Brazil steadily going
down the drain under Goulart. Here the only encouraging sign of late has been
increasing willingness by the Minister of Government and Sub- Secretary to
increase general travel-control efforts and to allow police action such as Colonel
Lugo's recent operations. However, del Hierro and Cordova are clearly being
restrained by Arosemena from really effective action.

Quito 19 April 1963

Another important trip to wonder about — this time it's Antonio Flores
Benitez, one of Echeverria's lieutenants, who left today for Cuba. What we can't
figure out is why Echeverria would send Flores to Cuba when Araujo is there and
Roura is in China. Roura's trip to China, according to Cardenas, was made
without the authorization of the PCE Executive Committee in Guayaquil and if
Pedro Saad finds out there will be serious trouble for Roura, a member of the
PCE Central Committee, and possibly for Echeverria. No doubt now that
Echeverria is moving ahead fast with his organization outside the party.

Flores was very careful not to mention his trip by telephone, but his wife let
it slip out a couple of days ago. We're monitoring the telephone now from the
apartment above and to the side of Flores's. Rodrigo Rivadeneira J moved into
the apartment with his brother Ramiro J and his mother, and between him and
Ramiro the transcriptions are kept right up to date. The connection was easy
because the building is completely wired for telephones and Rafael Bucheli J and
an assistant simply made the connections in the main terminal box in the
basement of the building. While Flores is away we'll try to get going on the audio

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operation although the audio technician isn't enthusiastic about drilling through
reinforced concrete at such a difficult angle.

I also decided to use Rodrigo Rivadeneira in the listening and observation
post for the technical operation against the PCE bookstore. On Sunday Larry
Martin and I made the installation from the room above with Ernesto Davalos J
giving us security and cover. Davalos was very nervous because his caretaker is a
communist and spends most of the time in the bookstore. Although I assured him
that we would be very quiet, Martin decided to make the installation behind the
baseboards and underneath several of the floorboards. The noise when we ripped
them up was so screeching, what with their centuries-old spikes, that Davalos
almost had a coronary. The same thing happened when we hammered the boards
back into place but luckily the caretaker showed no signs of suspicion — at least
according to Davalos. The audio quality is good (Echeverria is running the
bookstore while Roura is in China) although street noise at times drowns the
conversations.

Rivadeneira rented the office across the street as an LP and he sits in a false
closet I had built by Fred Parker, J a US citizen support agent who has a furniture
factory in Quito. Parker built the closet so that it could be carried in by pieces,
and Rivadeneira sits in it looking through a masked side, listening, recording,
snapping pictures of visitors to the bookstore, and keeping a log.

I had good luck also in getting just the right apartment across the street from
and slightly above Echeverria's apartment. This observation and listening post
(OP-LP) has just been rented through Luis Sandoval, the chief technician of
police intelligence, who accepted my offer to work with us full-time for the
foreseeable future. Sandoval is resigning from the police and will open a cover
commercial photography studio in the OP-LP. I've given him enough equipment
to start — more is coming later — and he will do the developing and printing of the
photographs taken by Rivadeneira at the bookstore. As soon as we have a chance,
we'll get Larry Martin back and try for the audio installation against Echeverria's
apartment — probably by drilling up from the Loja Club that occupies the entire
floor underneath Echeverria's place.

Quito 24 April 1963

A sensational case that may be our first real breakthrough has just developed,
but it looks as though interference from Arosemena may hamper follow-up. A

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few days ago, the Guayaquil base received information from one of its
penetration agents that a Cuban woman was training URJE members there. The
base passed the information to Colonel Lugo who managed to arrest her. Her
name is July da Cordova Reyes, at least that's what her documentation says, and
we may well have here the first case of the Cubans sending out training missions
to work in Latin American countries where they don't have diplomatic missions
— certainly it's the first case of its kind in Ecuador.

Colonel Lugo, however, reported that after her arrest he was ordered not to
conduct an extensive interrogation. I took up the matter with Jaime del Hierro,
the Minister of Government, in order to emphasize the great importance of this
case for discovering the extent of Cuban involvement, especially whether there
are other Cubans here besides the woman and all the details about when she
arrived, whom she trained, where and whom she has trained before, her
intelligence service in Cuba, communications, and much more. We are prepared,
I told the Minister, to bring down an expert from Washington who could assist in
the interrogation but who would not be recognizable as an American. All I got
from the Minister was evasion, and we've concluded that Arosemena gave the
order not to exploit the case. Two days ago the Governor of Guayas ordered her
expulsion from the country: we're trying to salvage the case but right now we're
not hopeful.

The extreme left has been forced into the dubious position of supporting the
very government that broke with Cuba. Arosemena certainly isn't fooling the
extreme left, or anyone else for that matter, on how hard he must fight for
political support. Two days ago he cancelled a provision of last November's
Budget Law prohibiting any government salaries higher than the President's. The
purpose of the law was to limit the very high salaries and benefits being received
by the heads of certain autonomous government agencies and by other officials
who hold more than one government job. Some, for example, were making the
equivalent of 1 000 dollars per month — twice as much as Arosemena. Obviously
he cancelled the law in order to glue on a little more firmly his Liberal Party
supporters and others who had been hurt by the salary limitation bill. Disgusting
for a desperately poor banana republic where over half the population receives
less than 1 00 dollars per year.

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Quito 1 May 1963

Some success on the da Cordova case. On 27 April she was deported to
Mexico but was refused entry and returned to Guayaquil. Colonel Lugo can't
proceed with interrogation until he gets the go-ahead from the ministry, so I'll
bring up the case again with del Hierro or Manuel Cordova. Warren Dean is
happy — he told me very confidentially that Gustavo Diaz Ordaz, the Mexican
Minister of Government, is really in the Chief of Station's pocket and that's
where I ought to try and get del Hierro. The way to do it, according to Dean, is to
provide money for a high government official's mistress-keeping: the caso chico
rent, food, clothing, entertainment. In Mexico, he said, the Chief of Station got an
automobile for the Minister of Government's girlfriend. The Mexican President,
with whom the COS also works closely, found out about the car and demanded
one for his girlfriend too. That must be an interesting station.

***

Gil Saudade has made some progress in labour operations. Last month a
provincial trade-union federation for Guayas (FETLIG) J was established as the
CEOSL affiliate there, replacing CROCLE. This was a long-sought after
development and perhaps will now end the dissension that has wracked CEOSL
for so long. The AIFLD courses, largely the work of our agents, Ricardo Vazquez
Diaz and Carlos Vallejo Baez, continue to expand. Vazquez was recently
confirmed as permanent CEOSL Organization Secretary and Matias Ulloa
Coppiano was confirmed as permanent Secretary-General. They had been acting
in these jobs since the expulsions in January of the old CROCLE agents.

Today only the CTE and the Catholic CEDOC were in the streets to celebrate
Labour Day. Instead of a parade, which would have turned out very few people,
the CEOSL group were invited by our Ambassador to a reception at his residence
which was highlighted with entertainment by Matias Ulloa. J

Quito 11 May 1963

Today a sensational new case has solved at least some of the recent bombings
and kept the city in a commotion all day. It started just after midnight this

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morning when four terrorists (two from URJE) hailed a taxi, overpowered and
drugged the driver, tied him up and placed him in the trunk. The terrorists then
drove around town passing various embassies where they intended to throw the
bombs they were carrying — along with a quantity of weapons and ammunition.
Because of recently increased police protection at the embassies, however, they
decided against the bombings. Just after dawn the driver regained consciousness
and after slipping out of his ropes managed to open the trunk of the taxi. The
terrorists saw him escaping but he got away and went for the police.

Major Pacifico de los Reyes took charge of the case. The terrorists panicked
and drove to the edge of town where they tried to escape on foot up the volcano
that rises on one side of Quito. The manhunt during the day caused widespread
alarm and exaggerated fears in Quito but eventually the terrorists were captured.
They have already confessed to various recent bombings and armed robberies,
through which they were raising funds to finance guerrilla operations. Most
sensational of all, however, is that their leader is Jorge Ribadeneira of Santo
Domingo guerrilla fame and another member is Claudio Adiego Francia, the
Argentine who was arrested in 1961 for training URJE members.

We didn't know about this new Rivadeneira group, and I've told de los Reyes
to try to determine if there is any connection between them and the Echeverria
group.

Quito 17 May 1963

Major de los Reyes has arrested Francia but Ribadeneira is still in hiding. He
has also arrested Echeverria and Carlos Rodriguez, Echeverria's chief lieutenant
for Indian affairs, but they protested their innocence and he had to let them go.
Propaganda play on the case is sensational, with photographs of the weapons and
ammunition spread all across the newspapers. Dean wants to press ahead with
propaganda exploitation of every possible case: Layedra, da Cordova, this one —
also the current trips of Araujo, Roura and Flores. Somehow Arosemena has got
to be forced into taking repressive action.

It's too soon to be sure but perhaps a change of policy is already under way.
Today Pablo Maldonado's Immigration Service denied passports to ten young
Ecuadoreans who have scholarships to 'study' in Cuba. I've given Maldonado this
type of information before but this is the first time he has taken strong action and
it may work. The students asked for passports saying they were only going to

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Mexico (where they would arrange visas and onward travel). The protests have
already started and we shall see how long del Hierro, Maldonado's superior, takes
to weaken.

Quito 19 May 1963

Roura's hooked! Juan Sevilla, J Minister of the Treasury, called me this
morning to advise that Roura arrived at the airport and was discovered to be
carrying 25,000 dollars in cash. Carlos Rendon, Sevilla's personal secretary, was
at the airport and made the body search, and right now Roura is being held
incommunicado by the police with the money impounded. I suggested to Sevilla
that he add to the sensation of the case by starting a story that Roura was also
carrying false documents, compromising papers and other similar material. This
is going to be a big one.

***

Jorge Gortaire J was back here in Quito a couple of days ago. He has
finished his trip to the military garrisons in the south and on the coast — making
several long delays through breakdowns. He's going to write up a complete report
back in Ambato, but he said there is very considerable disgust with Arosemena in
the military commands. If it weren't for Reinaldo Varea, in fact, there would be
nothing to keep the military leaders, once they got organized, from forcing
Arosemena's resignation. For now they see nothing to do because they still
favour constitutional succession. Varea is still the fly in the ointment, because the
junk swindle led to so much ridicule of the military. All the officers with whom
Gortaire spoke seriously are concerned about communist infiltration in the
government and preparations for armed action, but something more serious will
have to happen before they begin to move against Arosemena. So we must keep
up the pressure, exploiting every case to the maximum through propaganda
media and political-action agents. On Varea, Dean is considering whether or not
to ask him to resign, with encouragement in the form of a generous termination
bonus, but he hasn't decided.

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Quito 21 May 1963

The Roura case is headlines — supersensational! Everyone in the country is
talking about it. Jaime del Hierro has taken charge and is keeping up the
suggestions about 'compromising documents'. He told the press that Roura's
documents are more important than the money and relate to recent reports from
the US that Che Guevara is leading guerrilla-warfare planning for several South
American countries including Ecuador. The documents are also said to include a
'secret plan' for guerrilla warfare and terrorism in Ecuador.

Last night del Hierro asked me if I could get someone in Washington to
determine whether the bills are counterfeit because the Central Bank experts here
believe they're real. I suppose he and his friends, want to keep the money, so I
cabled headquarters to see what can be done.

Del Hierro's action puzzles me somewhat because of his sudden enthusiasm.
Perhaps Sevilla is pushing him hard because he was responsible for the arrest, yet
del Hierro still refuses to give the go-ahead on interrogation of the Cuban, July
da Cordova Reyes.

Quito 23 May 1963

Del Hierro is getting worried because the press and others keep urging him
for the compromising Roura documents. There aren't any, of course, and now
Roura's lawyers are beginning to move. Nevertheless both del Hierro and Sevilla
are keeping the publicity going by calling the Roura case an example of the
importation of foreign ideology to enslave the country. Del Hierro is also citing
the case of the ten students who were refused passports as another example of
falsification of documents for travel to Cuba for guerrilla-warfare training.
Yesterday Sevilla's secretary, who made the airport arrest, said in a press
statement that the Roura documents include instructions on how to organize a
Marxist revolution, how to intensify hatred between classes, and how to organize
campesinos and salaried agricultural workers.

Yesterday del Hierro ordered the arrest in Guayaquil of the local
correspondent of the New China News Agency, whose press carnet was in
Roura's pocket when he arrived. The correspondent only returned from Europe a
few days ago, and his trip must have been related to Roura's.

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Roura's defence began yesterday with publication of a statement that shows
he is worried about repercussions from Sa ad and the PCE leadership in
Guayaquil. He defended having the money, saying that he had been invited to
London by Gouzi Shudian (International Bookstore of Peking) and that his trip
was sudden and without authorization of the PCE. Because of recent
confiscations by the government of material purchased for sale in his bookstore,
Roura said, he had obtained 25,000 dollars for a printing shop to reproduce the
materials provided by Gouzi Shudian. From London he went to Peking, he said,
and he denounced the confiscation of his notes on visits to communes and other
sites.

No doubt Roura will end up in terrible trouble with the PCE — possibly even
expulsion like Ribadeneira. More important, his arrest will drive the wedge
deeper between the Saad and the Echeverria groups. What a ridiculous cover
story.

Quito 24 May 1963

Roura has had a bad day all around. He made his formal declaration to the
court alleging that he discussed the new printing facility in Peking with one Chan
Kung Wen. The money, however, was given to him, so he said, in Berne on his
return by someone named Po I Fo. We're checking these unlikely names with
headquarters — Roura's imagination knows no bounds.

Roura's lawyer also had a session before the Council of State (the highest
body for appeal against government violation of personal liberties) which refused
Roura's plea for liberty and took under advisement Roura's charges against
Sevilla and del Hierro for violating the Constitution. Now he'll have to stand trial
on the basis of the 'documents' and the money. We'll have plenty of time to
fabricate appropriate documents for del Hierro to use against Roura but first
we're working on something else.

John Bacon, the Station Reports Officer, and I suggested to Dean that we
prepare an incriminating document to be used against Antonio Flores Benitez — to
be planted on Flores when he arrives at the airport. There's a chance, of course,
that he'll come overland from Colombia or that he'll arrive in Guayaquil, but
Dean likes the plan and asked us to go ahead. The document will appear to be
Flores's and Echeverria's own report to the Cubans on the status of their
organization and on their plans for armed action. We are describing what we

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know about the organization, filling in with imagination where necessary, on the
basis of the information from the ECWHEAT telephone tap and reports from
Cardenas and Vargas, our two best penetrations of the Echeverria group. We are
emphasizing (for propaganda afterwards) Flores's penetration agents in the
Ministry of Defense, Army communications, the presidential bodyguard and the
presidential archives. We are also planning to mention relations with Araujo's
group and Gonzalo Sono Mogro, who seems to be training a separate
organization in explosives and weapons.

Quito 26 May 1963

It has been a busy week-end. Bacon and I finished the 'Flores Report'
yesterday and he took it out to Mike Burbano J to put in final form, correct
Spanish and proper commie jargon. He knows this usage best because he's the
cutout for Cardenas and Vargas. No question but that we've got a really
sensational and damaging document.

Bacon included in the report a general analysis of the Ecuadorean political
scene with appropriate contempt for the Saad PCE leadership for its 'reformist'
tendencies. He infers that the Echeverria group has already received funds from
Cuba and that this report is the justification for new funds. The date for
commencing an all-out terrorism campaign will be late July (since we already
have a report that the CTE plans to announce a general strike for that date).
Bombing targets and guerrilla attacks will be set for the homes of police and
military officers as well as key installations such as the water-works and the
telephone and electric companies.

Burbano passed it back and I typed it this morning — it filled five sheets of
flimsy blue copy paper. Then Dean came to the office and we agreed that Juan
Sevilla, the Minister of the Treasury, would be better for getting it planted than
Jaime del Hierro, the Minister of Government. I went to see Sevilla; he agreed
immediately and said he'll use Carlos Rendon, the same secretary and customs
inspector who nailed Roura. When I got back to the Embassy Dean was acting
like a little boy. He had gone over to the 'Favorita' to buy a tube of toothpaste and
had spent three hours squeezing out the paste and cleaning the tube. Then he
crumpled the papers, ground them a little with his shoe, folded them to fit into
the tube and pronounced the report genuine beyond doubt. I took the tube, now
with the report neatly stuffed inside, back over to Sevilla and tomorrow he will

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give it to Rendon who will plant it if possible. Rendon won't move from the
airport until Flores arrives, and if he comes via Colombia or Guayaquil, we'll
figure out some other way to get the document out. One way or another this one
should really provoke a reaction.

Quito 29 May 1963

Yesterday still another sensation broke when Araujo arrived back from his
trip to Cuba. Too bad we didn't have a document prepared for him but he did just
what we wanted. Sevilla's customs people, whom I had advised through Sevilla
of Araujo's imminent return, tried a body search but Araujo provoked such a
scandal that he was taken to the central immigration offices for the search. He
only had forty-one dollars, however, and was later released — but his screams at
the airport that revolution will occur very soon in Ecuador were prominently
carried in this morning's newspapers.

Other propaganda is coming out nicely. The Council of State meeting on the
Roura case was in the headlines, featuring Sevilla's very effective condemnation
of communism and Cuba in defence of his action against Roura. The case of
Guillermo Layedra, who blew his hand off training URJE members to make
bombs, is in the courts, and Jorge Ribadeneira's latest caper is still causing
sensation. Still, we haven't been able to get an interrogation of the Cuban woman.

Quito 31 May 1963

First try at the Echeverria bugging was a near disaster. The audio technicians,
Larry Martin } and an assistant, came back from Panama during the week and I
worked out an elaborate plan for security and cover. Gil Saudade brought up
from Loja one of his agents who works in Catholic student activities there,
Cristobal Mogrovejo, } who is the only agent we have who could easily rent the
Loja Club which occupies the floor underneath Echeverria's apartment. I brought
up Julian Zambianco from Guayaquil to be team leader and to direct Mogrovejo
as the shield for cover. Luis Sandoval and I were in the OP-LP across the street
observing and communicating with Zambianco via walkie-talkie. I also arranged
for two getaway vehicles through Pepe Molestina. J

Mogrovejo earlier this week arranged to rent the entire club for this
afternoon, a Friday, and to have an option to rent it for the rest of the week-end if

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his 'business conversations' with the foreigners required additional meetings.
From observation we knew which room Echeverria uses as a study and we
selected the proper spot beneath from which to drill up.

The team entered the club about ten o'clock this morning and Martin and his
assistant began quietly drilling, slowly and by hand in order not to arouse
Echeverria or his wife who were coming and going. About four o'clock this
afternoon the club manager burst in with about a dozen flower-hatted ladies to
whom, he said, he wanted to show the club. Mogrovejo protested that he had
been promised absolute privacy but because of the insistence of the club manager
and the ladies, Zambianco had to intervene to keep them from proceeding to the
room where the drilling was going on. The incident produced enough suspicion
in the club manager and enough panic in Mogrovejo to warrant calling the
operation off for now. I radioed to Zambianco to have the technicians fill in their
holes with plaster and to paint over. This only took a few moments and shortly
the team had evacuated the building.

For the time being we'll let this one cool off while I try to discover another
way to get access to the Loja Club. Mogrovejo was a bad choice. We won't forget
it because Echeverria, according to Cardenas, has given several indications that
he has some kind of communications with Cuba — possibly, one would suppose,
with a secret writing and radio link. A photo technician from Panama was
recently here and he said that TSD has large lenses that could be used to 'see
through' the curtains Echeverria sometimes draws in front of the table where he
works so that readable photographs of documents on the table might be
obtainable. This would be one way to read his communications.

Quito 2 June 1963

Flores is hooked and we've got another big case! Juan Sevilla and I were
playing golf together this morning when a caddy came running out to call him to
the telephone. We rushed into the clubhouse and sure enough it was Carlos
Rendon, his personal secretary, calling to say that Flores had arrived and that the
plant had worked perfectly. Sevilla rushed straight to the airport and I went home
to wait. Late in the afternoon he telephoned and when I went to his house he
explained that Rendon had seen Flores arrive and had put the toothpaste tube up
his sleeve. He let it fall out carefully while he was reviewing Flores's luggage,

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'found it' and began to examine it, finally opening it and' discovering' the
concealed report.

Arriving with Flores was another well-known communist, Hugo Noboa, who
was discovered to be carrying 1,400 dollars in cash in a secret pocket. This
money, propaganda material, and phonograph records of revolutionary songs
were confiscated along with the Flores report, and both Flores and Noboa were
taken under arrest to the political security offices for questioning.

Now to get the publicity going.

Quito 3 June 1963

We're going to have to fight for this one. Only a small notice appeared in the
press today on the Flores and Noboa arrests, and the only reference to the 'Flores
Report' was an allegation that microfilm had been found in his suitcase. Flores,
according to this notice, is protesting that if any microfilm was found it was
planted either in San Juan, Puerto Rico, where he was in transit, or here in Quito.

I checked with Juan Sevilla and he told me that he thinks Arosemena is going
to try to quash the whole case including the false document. This is why,
according to Sevilla, Flores is still in custody of the political security office
instead of the police investigations department under Major Pacifico de los
Reyes. He added that the key figure is Jaime del Hierro, the Minister of
Government and added that if I know del Hierro, I should confirm the importance
of Flores and the document. (Neither Sevilla nor del Hierro knows that I am in a
working relationship with the other.)

For most of the afternoon I've tried to get either del Hierro or Manuel
Cordova, the Sub-Secretary of Government, by telephone. It's not like them to
avoid me like this, and Dean is about to blow up because the report hasn't been
surfaced.

Quito 4 June 1963

There's no doubt now that Arosemena has tried to cover up the case and
protect Flores, but we're prying it loose almost by the hour. Sevilla threatened to
resign if the case were suppressed and the rumours of a new Cabinet crisis were
so strong yesterday and today that the Secretary-General of the Administration
made a public denial of the crisis.

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Del Hierro finally called me back today, and when we met at Cordova's
house he gave me the 'Flores Report' asking that I check it for authenticity
because it is so grave. I couldn't simply give it a moment's look and pronounce it
genuine so I took it back to the station. When I told Dean of this he went into a
fury, stamped up and down and said I'd better get that report surfaced or else.
He's really disgusted with del Hierro, whom he thinks is trying to delay making it
public in order to protect the Liberal Party from embarrassment; the document,
after all, is pretty damaging to the government, even though it is primarily aimed
at exposing the Echeverria group.

A positive sign is that Flores has been passed from the political security
office to the police, which places him directly under del Hierro. In his declaration
Flores only said that he had been in Europe on a forty-five-day trip as a journalist
(he writes for the leftist weekly La Mariana) with no mention of travel to Cuba.

Quito 5 June 1963

Dean's fit of temper shows no signs of diminishing. This morning he
demanded Jaime del Hierro's private telephone number at the ministry, which I
gave him. He called del Hierro and told him angrily that of course the document
is authentic and that every Ecuadorean should read it. Dean was careful to record
this call on his dictaphone just in case del Hierro complains to the Ambassador.

Then I proposed to Dean that I give a copy of the document to Jorge
Rivadeneira Araujo, the brother of Rodrigo Rivadeneira — the transcriber of the
Flores telephone tap. Jorge has long participated in the clandestine printing
operation, along with his brothers, and is a writer for El Comercio, Quito's
leading daily. We don't usually place propaganda through Jorge, but Dean agreed
since it is the fastest way to put pressure on del Hierro to release the original
document. Later I took a copy to Rodrigo which he is passing to Jorge who will
show it to his editors at the newspaper. This may destroy my relationship with del
Hierro and Cordova but Dean doesn't care — he doesn't think Arosemena and the
Liberals can last much longer anyway.

Quito 6 June 1963

Our ploy against del Hierro worked liked a charm. This morning about ten
o'clock Cordova called me from the Embassy receptionist's desk and when I went

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down he took me out back to del Hierro who was waiting in his car. He said he
urgently needed back the Flores document because the press had somehow got a
copy and he would have to release the original later today I rushed up for the
document, returned it to del Hierro and told Dean who whooped for joy Then I
called Rodrigo Rivadeneira to alert his brother Jorge that the Ministry of
Government would release the document later today It may not be printed in
today's evening newspapers but already the whole town is buzzing about it.

Today the Council of State formally rejected Roura's case against del Hierro
and Sevilla, which wasn't unexpected. Roura will be on ice for a long time and
now Flores's chances of getting off are nil. Tomorrow, Sevilla's formal statement
to the Council of State will be published in the newspapers — a full page which
we're paying for and which includes PCE data like membership figures and
recruitment priorities that I passed to Sevilla for documentation.

Both Mario Cardenas and Luis Vargas report that Echeverria has been
crushed psychologically by this blow. He fears that with the Roura arrest and
now Flores he'll surely be reprimanded by the Saad leadership, possibly even
expelled from the PCE. He has now gone into hiding and the agents are trying to
find out where.

Quito 7 June 1963

Finally it's in print and the sensation is immense. Everything's included:
description of Saad and the PCE Guayaquil leadership as 'old bureaucrats full of
bourgeois vices, faithful to the Moscow line and acting as a brake on revolution'.
Also: 'We (the Echeverria group) are faithful to the experiences of the Cuban
revolution and the necessity to prepare for armed insurrection'. Araujo is
described as having a good number of trained and armed teams and the
Ribadeneira group is cited as possibly useful for 'our' purposes. All the different
critical government offices where Flores has his contacts are mentioned —
including the Presidential Palace — and the date for commencing operations
(urban terrorism and rural guerrillas) is given as late July to coincide with 'our'
urging of the CTE to call a general strike for that time.

As if this document weren't enough in itself, by sheer coincidence the CTE
yesterday announced a general strike for late July. Our agents had reported that
this announcement would come some time and we had included it in the Flores
document. This announcement was carried in the press today, alongside the

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Flores document, as proof that the latter is genuine. Moreover, Sevilla's statement
to the Council of State also came out this morning.

Quito 15 June 1963

Several pieces of good news. First, I've just received my second promotion
since coming to Quito, to GS-11 which is about equivalent to captain in the
military service. The other is that I'm being transferred to Montevideo, Uruguay,
at the end of the year — this I learned informally in a letter from Noland the other
day. I had asked to be transferred to Guayaquil as Base Chief if the job became
vacant, but the Montevideo assignment is good news because we'll be near the
seashore again. These mountains are getting oppressive lately, and besides,
Noland says Montevideo is a great place to live with good operations going.

Meetings between Zambianco and Medardo Toro, J the Velasquista gunman,
have been fruitful but Dean is getting nervous about collecting timely
intelligence on Velasco's plans to return for next year's elections. Through
Zambianco I have worked out a plan to send Toro to Buenos Aires under cover of
medical treatment for a back injury that has needed special attention for some
years. Toro will take the treatment in Montevideo but will contact Velasco in
Buenos Aires and stay as close to him as possible. Our hope is that Velasco will
take Toro into his confidence as a kind of secretary and general handyman — this
shouldn't be difficult as Toro was at Velasco's side with two sub-machine-guns
draped over his shoulders up to the moment Velasco left the Presidential Palace.
I've notified the Buenos Aires station, set up a contact plan for an officer of that
station, and requested that Toro be placed on the list for the polygraph the next
time the interrogators come around. Hopefully Toro will have his affairs arranged
so that he can leave by the end of the month.

Over the week-end I'm going to Guayaquil and to the beach for a day — then
to Manta and Portoviejo, the two principal towns of Manabi province just north
of Guayas. In Portoviejo I'll introduce Julian Zambianco to Jorge Gortaire's
brother, Frederico Gortaire, J an Army lieutenant-colonel and commander of the
Army units in the province. Because of the extreme poverty in Manabi province,
even by Ecuadorean standards, communist activities there have prospered in
recent years. Zambianco has been working several operations in the province
including support of a well-known anti-communist priest, and he'll be able to
handle contact with Gortaire on his frequent trips there. Contact arrangements

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were made by Jorge Gortaire when he was in the province last month, so getting
this new operation going will be easy. The purpose is to be able to pass
information on communist activities in Manabi to Lieutenant-Colonel Gortaire
who, according to his brother, will not hesitate to take strong and prompt action
unfettered by the political restraints often imposed on Colonel Lugo in
Guayaquil.

Warren Dean is leaving shortly for six or eight weeks' home leave. Too bad
about Gil Saudade. Normally when a Chief of Station leaves the Deputy simply
takes over as Acting COS. But with all the tension and instability right now Dean
asked for a temporary replacement from headquarters. It'll be Dave McLean, J a
Special Assistant to Colonel King, J the Division Chief who, surprisingly,
managed to survive the head-rolling exercise after the Cuban invasion. While at
headquarters Dean is going to push for one or two more slots for case officers
under Embassy cover.

Quito 22 June 1963

The struggle is growing within the government among the factions favouring
different lines of action in the face of the growing tension and fear of imminent
insurgency. Juan Sevilla, the Minister of the Treasury, is the leader of the hard-
liners while Jaime del Hierro, Minister of Government, is somewhere in between,
trying to manoeuvre so that the Liberals can stay in the government and retain
their emoluments. Arosemena leads the doves, who refuse to see the danger, and
the leftists, who would like to see the power of the traditional parties broken.
Thus the cooperation we're getting from del Hierro in the security field is mixed.

Today, for example, the government finally announced a programme that I've
been pushing since last year to restrict travel to Cuba. From now on travel to
Cuba by Ecuadoreans is formally banned and all passports will be stamped 'Not
Valid for Travel to Cuba'. This programme is the work of Pablo Maldonado who
told me only recently that such a drastic measure would still be very difficult to
get approved. On the other hand del Hierro still evades all my requests for access
to the Cuban woman who was training in Guayaquil — now she's been sent to
Tulcan which is practically isolated and a place from which she could 'escape'
and disappear across the border in Colombia.

In Guayaquil two days ago, an anti-communist television commentator
narrowly escaped when a bomb demolished his car. Yesterday Colonel Lugo's

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police raided a bomb factory and storage facility at the isolated house of Antonio
Chang, a militant of an URJE faction, following a lead provided by a base agent.
Chang's wife, two sons, a Spanish bomb technician and a helper were all arrested
and have made sensational declarations, including the fact that they were trained
by a Cuban. (The Cuban hasn't lived in Cuba since the 1940s but this item was
hidden in small print in the propaganda coverage.)

Meanwhile we're trying to keep media coverage going on all the cases, old as
well as new, and stations in countries nearby are helping. As each case breaks we
advise Caracas, Bogota, Lima, Rio de Janeiro, Santiago and others, mailing
immediately the clips of what's been published. These stations generate editorial
comment on the communist danger in Ecuador and send clips back to us which
we use to generate still more comment based on the Ecuadorean image abroad.

Dean has made one last effort before going on home leave to salvage a little
mileage from Reinaldo Varea, our discredited Vice-President. He told Varea to
get going on speeches related to all the recent cases revealing communist plans
for action and the bombings. Yesterday Varea began with a speech at the national
convention of the Chamber of Industries, denouncing communism as a cancer
seeking to destroy the national life. Hopes for his succeeding Arosemena are ever
so slim but three days ago the Supreme Court began hearing charges against three
persons in the junk swindle and Varea, happily, wasn't one of them.

Quito 25 June 1963

Yet another sensation broke today: this one without our help. The case began
this morning when one of the revolutionary paratrooper group led by Lenin
Torres, still under arrest since they were discovered last year trying to help the
guerrillas they had arrested to escape, themselves escaped and joined with three
others in order to hijack one of the Area Airlines DC-4's that fly between here
and Guayaquil. The plan was to fly over Quito distributing fly-sheets from the
aircraft telling people to mass at the Presidential Palace and demand the release
of Torres and the other paratroopers still being held. Also while the aircraft was
circling URJE members would have carried out a series of intimidation bombings
and would have demanded the release of Flores, Noboa and Roura as well as the
paratroopers. They would have landed, taken aboard the released prisoners and
flown to Cuba.

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The paratrooper who escaped had been outside the prison under guard on an
urgent family matter, but the guard, who was overpowered, tied and gagged, and
left behind, got loose and reported the planned hijacking which he had overheard.
Pacifico de los Reyes, J Chief of Criminal Investigations in Quito, placed some
of his men in maintenance uniforms at the airport and when the four hijackers
arrived they were immediately taken into custody Seized with them were arms,
bombs, tear-gas canisters, walkie-talkies, and TNT — as well as the fly-sheets.
After their arrest they implicated Araujo and Ribadeneira in the plan, although
this may well be a little provocation by de los Reyes. The whole episode, in fact,
may have been staged or at least well-penetrated.

The story is headlines in the afternoon papers and has sent another shock-
wave across the country as it's the first political hijacking here.

Quito 27 June 1963

Today is a bigger day for propaganda than most but it illustrates how our
campaign to arouse concern over the communist problem has been going. The
front page of El Comercio carries four articles related to it. The headlines report a
press conference yesterday by Reinaldo Varea % in which he condemned
communism for threatening the country with organized subversion, including
acts of terrorism and massacre. He also pointed to Cuba, supported by Russia and
China, as the focal point for communist terror in America, adding that when the
Congress convenes in August a special law against terrorism should be passed,
possibly to include the outlawing of communism. A second article reports a press
conference by Jaime del Hierro, in which he promised to exterminate every
centre of communist terrorism in the country. A third article describes follow-up
raids of Colonel Lugo's police in Guayaquil and the discovery of another bomb
factory from which 150 bombs were seized — it also reports a strategy meeting
held two days ago between Colonel Lugo, Manuel Cordova, the Commanding
General of the National Police and the Governor of Guayas province. A fourth
article describes the latest revelations in the frustrated airliner hijacking. Not to
be forgotten, of course, is the junk swindle, and a fifth front-page article relates
the latest development in this case. Aside from the front page, the lead editorial
expresses alarm over the recent terrorist cases and still another editorial wishes
success to some Cuban exiles who recently landed a raiding party in Cuba.

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Quito 28 June 1963

Police in Guayaquil under Colonel Lugo seized some 300 more bombs in
raids yesterday, and arrests of terrorists there now number nineteen.

Also yesterday, Juan Sevilla, J Minister of the Treasury, was honoured at a
banquet given by the Chambers of Industry and Commerce and the Textile
Association. In condemning communism Sevilla said: 'The country is suffering a
grave moral crisis. It is discouraging to walk through government offices and see
how moral values have deteriorated. It is indispensable that we reestablish moral
values. ' He was given a parchment in appreciation of his 'clear democratic
position in defence of free enterprise and of our country's Western ideology'.

Media exploitation of the airliner hijacking continues as does the Roura case.
Today it was announced that the money taken from Roura will be examined by
experts to see if it is counterfeit. This is a delaying formality because I've already
told Jaime del Hierro that the Treasury Department in Washington has refused to
certify that the US currency is counterfeit.

Quito 5 July 1963

The chain of recent cases, particularly the Roura and Flores cases, has
produced one of the results we wanted. At a special meeting of the PCE Central
Committee the whole Pichincha Provincial Committee under Echeverria was
dismissed, with Roura expelled from the party and Echeverria suspended.
Already Jaime Galarza, one of Echeverria's lieutenants, has published an article
suggesting that Pedro Saad, PCE Secretary-General, was behind the revelations
in the Flores document and Roura's arrest, because such information could only
come from highly placed party members.

The momentum of the last three months' campaign is having other effects.
Most of our political-action agents, particularly the rightists in the ECACTOR
project, are reporting improving disposition to a military rather than a
Congressional move against Arosemena, what with the alarm and gravity of the
current situation. At the Ambassador's reception yesterday, moreover, the
politicians talked considerably of their surprise that communist preparations have
progressed so far. Moreover, everyone seemed to be apprehensive over the
spectre of Velasco's return and the probability that he'll win again next year.
Some members of Congress are anxious to begin proceedings against

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Arosemena, but many realize the odds favour Arosemena and his patronage over
a weak and divided Congress.

Quito 8 July 1963

Rafael Echeverria is still hiding and has seen our agents only rarely In order
to get closer monitoring of his activities, and possibly to discover his hiding-
place, I've arranged to turn over the Land Rover bought for Jorge Gortaire's trip
to Luis Vargas, a PCE penetration agent. I gave the car to Jose Molestina, J a
support agent and used-car dealer, to place on sale, and at the same time John
Bacon sent Vargas around to make an offer. Molestina doesn't know Vargas,
much less as a communist, and when he told me of the offer I told him to take it.
Now Vargas will probably be asked by Echeverria (who has no private
transportation) to drive him around for his meetings.

Media exploitation continues on the recent cases as well as on efforts to
salvage Varea. The Guayaquil base placed an editorial in El Universo, the main
daily there, praising Varea for his recent anti- communist speeches. We replayed
the editorial here in El Comercio. We've also used the CEOSL to condemn
communist plans for terrorism.

Operations at the Georgetown station (British Guiana) have just brought a
big victory against the Marxist Prime Minister, Cheddi Jagan. Jagan has led that
colony down a leftist-nationalist path since coming to power in the 1950s on the
strength of Indian (Asian) predominance over blacks there. The Georgetown
station operations for several years have concentrated on building up the local
anti-Jagan trade-union movement, mainly through the Public Service
International J (PSI) which is the International Trade Secretariat for public
employees. Cover is through the American Federation of State, County and
Municipal Employees, J the US affiliate of the PSI.

Last year through the PSI the Georgetown station financed an anti-Jagan
campaign over the Budget that included riots and a general strike and precipitated
British intervention to restore order. This past April, with station financing and
direction, another crippling strike began, this one led by the Guiana civil servants
union which is the local PSI affiliate, and it has taken until just now to force
Jagan again to capitulate. Visitors here who have also been to the Georgetown
station say eventually the Agency hopes to move the leader of the black

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community into power even though blacks are outnumbered by Jagan and the
Indians.

Quito 11 July 1963

Arosemena's out and a four-man military junta is in.

It began last night at a banquet Arosemena gave for the President of the
Grace Lines — W. R. Grace and Co. has large investments in Ecuador — to which
high-ranking Ecuadorean military men were invited because the Grace Lines
President is a retired US Navy admiral. During the toasts Arosemena made
favourable commentary about US business operating in Latin America but he
insulted our Ambassador by derisive reference to US diplomatic representatives.
In his drunkenness Arosemena also demonstrated incredible vulgarity and finally
left the banquet and his guests.

This morning the chiefs of the military services decided at a meeting at the
Ministry of Defense to replace Arosemena with a junta and about noon the
Presidential Palace was surrounded by tanks and troops. I went down to the Hotel
Majestic just in front of the Palace where Jorge Andino, J a support agent and
owner of the hotel, arranged a room where I could watch the action. I also
monitored the military intelligence radio and reported by telephone and walkie-
talkie back to the station where frequent progress reports on the coup were being
fired off to headquarters and to Panama (for the military commands there who
receive all Agency intelligence reporting in Latin America).

Several hours of tension passed as Arosemena, known to be armed, refused
to receive a delegation from the new junta. He remained in the presidential living
quarters while the junta members arrived and went to work in the presidential
offices. Eventually Arosemena was disarmed by an aide and taken to the airport
where he was placed on a military aircraft for Panama — the same place that
Velasco was sent to less than two years ago.

As the coup was taking place a leftist protest demonstration was repressed by
the military with three killed and seventeen wounded but these figures will
probably be much higher if an accurate count is ever made. Also during the coup
Reinaldo Varea tried in vain to convene the Congress in order to secure his
succession to the Presidency, but it's no use — he's finished.

The junta is composed of the officers who commanded the Army, Air Force
and Navy plus a colonel who was Secretary of the National Defense Council. The

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Navy captain is the junta chief but Colonel Marcos Gandara J of the Defense
Council is said unanimously to be the brains and main influence. No question
that these men are anti-communist and will finally take the kind of action we
want to disrupt the extreme left before they get their serious armed operations
underway

Quito 13 July 1963

No problem for the junta in consolidating power. Loyal messages were
received from military units throughout the country, civil liberties have been
suspended, and communist and other extreme leftists are being rounded up and
put in jail, more than a hundred in Guayaquil alone. Communism is outlawed
(the junta's first act), censorship has been imposed, there is a curfew from 9 p.m.
to 6 a.m., and next year's elections are cancelled.

It will take some days for formal US recognition of the junta but we've
already started passing data from the Subversive Control Watch List to Major de
los Reyes here in Quito and to Colonel Lugo in Guayaquil which they are using
with military colleagues in the arrests campaign. For the time being we'll keep
working with these police agents, and after US recognition of the junta and
Dean's return, decisions will be made on new contacts in the government. The
most likely liaison contacts are the Minister of Defense, Colonel Aurelio
Naranjo, who was chief of the Cuenca garrison and leader of the movement that
forced Arosemena to break with Cuba; the Minister of Government, Colonel Luis
Mora Bowen; J and the junta leader, Colonel Marcos Gandara.

Besides outlawing communism the junta is looking favourably at the reforms
that the civilians were never able to establish. In their first statement the junta
said its purpose is to re-establish moral values because the country had reached
the brink of dissolution and anarchy. Their rule will be limited to the time
necessary to halt the wave of terrorism and subversion and to resolve the
country's most urgent problems. They have also declared that their government
will not be oligarchic and will have policies designed to stimulate economic and
social development in order to raise the standard of living — not just through
development, however, but also through the redistribution of income. Among its
highest priorities are agrarian, tax and public administrative reforms.

In a press conference Colonel Gandara said that reforms will be imposed by
decree and that after repressing the extreme left the junta will call for a

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constituent assembly, a new Constitution and elections. However, he added, the
junta might stay in power for two years to accomplish these plans — which
immediately caused a cry of outrage from politicians in all quarters. Today, rather
sheepishly, the junta issued a statement saying that they will 'not be in power for
a long time'.

In justifying their takeover the junta said that Arosemena had spotted the
national honour with his frequent drunkenness and his sympathy for communism.
Arosemena, for his part, is saying in Panama, as Velasco did, that he still hasn't
resigned. Varea is also in Panama now, but he had a happy departure. At the
Quito airport where he was taken under arrest yesterday he was given an
envelope from the junta containing a month's pay.

Quito 31 July 1963

The first three weeks of junta rule have been rather mild as military
dictatorships go, in fact after all the crisis and tension in recent months one can
even note a feeling of euphoria. Today the junta was recognized by the US but all
along we've kept busy getting information to Major de los Reyes and Colonel
Lugo. Goes to show how important station operations can be at a time when
conventional diplomatic contacts are suspended. Even so, the most important
communist leaders from our viewpoint, Echeverria, for example, have eluded all
efforts to catch them. Very possibly some have even left the country.

At least for the time being the junta has considerable political support from
Conservatives, Social Christians and others - not formally as parties but as
individuals. How long this will last is unknown because the junta is obviously
determined to end the power struggle between Velasco and Ponce and the
instability such caudillismo brings. Moreover, by stressing that they intend to
wipe out special privilege and the rule of oligarchies while pledging projects in
community development, housing, public-health and education, the junta is
attracting considerable popular support.

From our standpoint the junta definitely seems to be a favourable, if
transitory, solution to the instability and danger of insurgency that were blocking
development. By imposing the reforms this country needs and by taking firm
action to repress the extreme left, the junta will restore confidence, reverse the
flight of capital and stimulate economic development.

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Quito 15 August 1963

Dean is back from home leave and is moving fast to get established with the
junta. Already he is regularly meeting Colonel Gandara, the most powerful junta
member, Colonel Aurelio Naranjo, the Minister of Defense and Colonel Luis
Mora Bowen, the Minister of Government. With Gandara he is using as bait the
weekly Latin American and world intelligence summaries (cryptonym PBBAND)
that are received from headquarters each Friday, translated over the week-end
and passed to Gandara on Monday. Already Gandara has given approval in
principle to a joint telephone- tapping operation in which we will provide the
equipment and the transcribers and he will arrange the connections in the
telephone exchanges and provide cover for the LP. Tentatively they have agreed
to set up the LP at the Military Academy. What Dean wants is a telephone-
tapping operation to rival the one in Mexico City where, he said, the station can
monitor thirty lines simultaneously. After this operation gets going we'll save
Rafael Bucheli for monitoring sensitive political lines without the knowledge of
the junta.

Gil Saudade has been transferred to Curitiba, Brazil (a one-man base in the
Consulate) and his replacement, Loren Walsh J doesn't speak Spanish. Walsh,
who transferred to WH from the Far East Division after a tour in Karachi, had to
cut short his Spanish course in order to take the interdepartmental course in
counter-insurgency that is required now for every officer going out as Chief or
Deputy Chief of Station. What this means to me is that I've got to take over most
of Saudade's operations: Wilson Almeida J and Voz Universitaria; the CEOSL
labour operation with Matias Ulloa Coppiano, Ricardo Vazquez Diaz and Carlos
Vallejo Baez; and the media operation built around Antonio Ulloa Coppiano, the
Quito correspondent of Agenda Orbe Latinoamericano. Most of these agents are
also leaders of the Popular Revolutionary Liberal Party and Antonio Ulloa runs
the PLPR radio-station that we bought through him and Juan Yepez del Pozo, Jr.
as a media outlet. This development is more than a little aggravating because the
new deputy won't be able to take over any of these operations as none of the
agents speaks good English. Dean said relief will come soon because he got three
new Embassy slots; two will be filled in coming months and one early next year.
All I can do with these new agents is hold their hands until somebody with time
can really work with them.

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Right now there are about 125 political prisoners in Quito, including not only
communists but Velasquistas and members of the Concentration of Popular
Forces. The junta policy is to allow them to go into exile, although some will be
able to stay in Ecuador depending on their political antecedents — judgement of
which, in most cases, is based on information we're passing to Colonel Luis Mora
Bowen, the Minister of Government. Processing these prisoners, and others in
Guayaquil and elsewhere is going to take a long time because of interrogations
and follow-up. Although Dean is working closely with the Minister of
Government in processing the prisoners, he hopes to use these cases to start a
new unit in the Ministry of Defense that will be solely dedicated to anti-
communist intelligence collection - basically this is what we had previously set
up in the police. In fact the Ministry of Defense will be better because politics
sooner or later will come back into the Ministry of Government and the police,
while the military unit should be able to remain aloof from normal politics,
concentrating on the extreme left.

First on the junta's programme of reforms are the universities and the
national cultural foundation called the Casa de la Cultura, both of which have
long traditions as centres of leftist and communist agitation and recruitment.
Several station and base operations are focused on giving encouragement to the
junta for university reform including agents controlled through Alberto Alarcon
in Guayaquil and the student publication Voz Universitaria published by Wilson
Almeida. According to Gandara the first university reform decree will be issued
in a few days with the important provision that student participation in university
administration will be greatly reduced.

Quito 30 August 1963

Labour operations always seem to be in turmoil but now and then they
produce a redeeming flash of brilliance. Ricardo Vazquez Diaz, one of the labour
agents I took over from Gil Saudade, told me the other day that his mistress is the
official shorthand transcriber of all the important meetings of the Cabinet and the
junta and that she has been giving him copies so that he can be well-informed for
his CEOSL work. He gave me samples and after Dean saw them he told me to
start paying her a salary through Vazquez. From now on we'll be getting copies of
the record of these meetings even before the participants. In the Embassy we'll
make them available just to the Ambassador and the Minister Counsellor, and in

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Washington short summaries will be given limited distribution with the entire
Spanish text available on special request. The Ambassador, according to Dean, is
most interested in seeing how the junta and Cabinet members react to their
meetings with him and in using these reports to plan his meetings with them.
Eventually we'll try to recruit Vazquez's mistress, ECSIGH-1, J directly, but for
the moment I'll have to work this very carefully in order not to jeopardize the
CEOSL operation. Vazquez claims he's told no one of the reports, which I
believe, because, if he told anyone, it would be one of the other CEOSL agents
who probably would have mentioned it to me. These reports are jewels of
political intelligence — just the sort of intelligence that covert action operations
should produce.

(There has been a change, incidentally, in terminology: the operations that
used to be called PP operations — labour, youth and students, media, paramilitary,
political action — are now called covert action, or CA, operations. In headquarters
this change in terminology was made at the same time the old PP staff was
merged with International Organizations Division to form what is now called the
Covert Action Staff.)

In labour operations themselves we've had serious problems with the new
government, partly as a result of the junta's arbitrariness — the right to strike, for
example, is suspended. In this respect the junta tends to treat the CEOSL trade-
union movement much in the same fashion as it treats the CTE. This general
trend is aggravated by the Minister of Economy, Enrique Amador Marquez, |
who is one of the former labour agents of the Guayaquil base terminated last year
for regionalism. Amador is doing all he can to promote decisions favourable to
his old CROCLE and COG friends and detrimental to CEOSL.

Right now the most serious case involves the junta's attempts to reorganize
the railways which are one of the many inefficient government autonomous
agencies that together spend about 65 per cent of public revenues. The lieutenant-
colonel appointed to run the railways is favouring the CEDOC (Catholic) railway
union which is backed by COG and CROCLE against the other railway union
which is part of CEOSL and is an affiliate of the International Transport Workers
Federation J (ITF) in London.

I arranged for Jack Otero, J the Assistant Inter-American Representative of
the ITF and one of our contract labour agents, to come to Quito from Rio de
Janeiro to help defend the CEOSL railway union. He is here now but instead of
following my instructions to approach the matter with restraint he started

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threatening an ITF boycott of Ecuadorean products. The spectre of boatloads of
rotten Ecuadorean bananas sitting in ports around the world provoked counter-
threats from the junta and we've had to cut Otero's visit short. The ITF railway
union may have to suffer for a while but we're going to get action now from
Washington, probably from someone like Andrew McClellan J who replaced
Serafmo Romualdi as the AFL-CIO Inter-American Representative when
Romualdi set up the AIFLD. What the junta needs is a little education on the
difference between the free trade -union movement and the CTE, but. this may
not be easy with Amador working behind the scenes for CEOSL'S rivals.

The Minister of Government is very cooperative in following our advice over
the matter of the political prisoners. We have a special interrogation team here
now from the US Army Special Forces unit in the Canal Zone: they're from the
counter-guerrilla school there and are helping process the interrogation reports
and prepare follow-up leads. The results aren't especially startling but they are
providing excellent file information. As a result the prisoners are being released
in a very slow trickle and most are choosing exile in Chile. Araujo is one of the
big fish that was able to hide, but, a few days ago he and six others got asylum in
the Bolivian Embassy. Chances are he'll be there a long time before the junta
gives him a safe conduct.

University reform continues. Already the universities in Loja and Guayaquil
have been taken over and Central University here in Quito is due next. What this
means is the firing of communists and other extreme leftists in the university
administrations and faculties. The same process is under way in the primary and
secondary schools and is in charge of the military governors of each province.

Reforms in the government administration are also widening. Already the
Ministry of Foreign Affairs and the Ministry of Economy are being reorganized.
So far the junta's not doing so badly — tomorrow Teodoro Moscoso, the
Coordinator of the Alliance for Progress, arrives to negotiate new aid agreements.

Quito 8 September 1963

These labour operations are so messy they're forcing me to put practically all
my other operations on ice for lack of time. No wonder Saudade had so few
agents: they talk on and on so that one agent-meeting can fill up most of an
afternoon or morning.

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Our call for help from McClellan backfired. He sent a telegram to the junta
threatening AFL-CIO efforts to stop Alliance for Progress funds and appeals to
the OAS and UN if the junta doesn't stop its repression of trade unions. Three
days ago the Secretary-General of the Administration denounced McClellan's
telegram and showed newsmen documents from CROCLE and COG backing the
junta and the colonel in charge of the railways. Now the junta is going to suspend
the railway workers' right to organize completely. Somehow we have to reverse
this trend and we asked for a visit from some other high-level labour figure from
Washington, hopefully William Doherty, } the former PTTI Latin American
Representative and now with the AIFLD. Doherty is considered to be one of our
more effective labour agents and Dean thinks he might be able to change the
junta's attitude towards our organizations.

Not long ago the CA staff sent two operations officers to the Panama station
to assist in labour operations throughout the hemisphere much as the Technical
Services Division officers in Panama cover the area. They came for a short visit
to Quito, more for orientation than anything else, but they're going to get ORIT to
send someone to see the junta about these problems. Recently, according to Bill
Brown J who is one of the labour officers, the Secretary-General of ORIT, Arturo
Jauregui, } was fully recruited so that now he can be guided more effectively.
Before, our control of ORIT in Mexico City was exercised through Morris
Paladino, J the Assistant Secretary-General and the principal AFL-CIO
representative on the staff. Possibly we will get Jauregui himself to intervene.

We've also had two polygraph operators here for the past week testing agents.
I decided finally to meet Atahualpa Basantes, J one of our PCE penetration
agents who has been reporting since 1960 but who had never been met directly
by a station officer, using the polygraph as the excuse.

The interview with Basantes was interesting because it showed how useful
the LCFLUTTER is for things other than determining honesty in reporting and
use of funds. In the case of Basantes, which- is not unusual according to the
operator, the polygraph brought out a flood of remarks about his motivation and
his feeling towards us and his comrades in the party. He's certainly a confused
man, drawn to us by money yet still convinced that capitalism is destructive to
his country. Why does he work for us? Partly the money, but he rationalizes that
the PCE leadership is rotten. From now on I'll try to see him at least once a
month. His reporting has fallen off during the last six months, mostly because Dr
Ovalle } is such a poor agent handler, so I'm now looking for a new cutout.

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Instead of a raise in pay, which could be insecure, I've agreed to pay the premium
on a new life-insurance policy for Basantes — it's expensive because he's in his
late forties and his health is poor, but it'll be one more control factor.

The polygraph operator who worked with me on the Basantes case is Les
Fannin. J Fannin was arrested in Singapore in 1960 while he was testing a local
liaison collaborator whom the station was trying to recruit as a penetration agent
of the Singapore police. The Agency offered the Singapore Prime Minister some
three million dollars as a ransom for Fannin and Secretary of State Rusk even
wrote a letter of apology in the hope of getting Fannin out. Nevertheless, he spent
months in the Singapore jail before being released. He told me the Agency
analysis of the case suggested that the British MI-6, which controlled the
Singapore service at the time because Singapore was still a British colony, had
been aware of the attempted recruitment from the beginning. In a strong reaction
to this violation of the long-standing agreement that the CIA refrains from
recruitments in British areas except when prior permission is granted, MI-6,
according to Fannin, arranged for the Singapore security official to play along,
and then at the moment of the polygraph they had Fannin arrested.

One of Saudade's agents whom he sent to Cuba has just been arrested on his
return to Guayaquil and nobody seems to know what to do about him. The agent
is Cristobal Mogrovejo, J the same Loja agent whom we used to front for the
near-disaster audio installation in the Loja Club beneath Rafael Echeverria's
apartment. Dean is taking a hard line on Mogrovejo because the agent was told
not to return to Ecuador when he was met by officers from the Miami (ex-
Havana) station after leaving Cuba. We had sent that instruction precisely to
protect Mogrovejo, but since he refused to comply, Dean isn't anxious to spring
him loose. He was arrested because he had Cuban propaganda material in his
baggage (incredibly stupid) on his arrival. Already the arrest is causing wide
comment in Loja where Mogrovejo is President of the University of Loja law-
student association and well known as a staunch Catholic.

For the time being the audio operations against Echeverria's apartment and
Flores's apartment are suspended. Sooner or later Flores will go into exile and
Echeverria is still hiding. The audio-photo operation at the PCE bookstore is also
suspended since the junta closed the bookstore right after the coup. Now we'll
have to take out the audio equipment with more pounding and squealing of
spikes.

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Quito 20 September 1963

This has been a month of constant movement of people: agents, visitors and
new station personnel. The first of the new station operations officers has arrived
— he's Morton (Pete) Palmer J and his cover is in the Embassy economic section.
Unquestionably he'll be an excellent addition to the station and I'm already
beginning to unload some of the covert action operations on him.

Dean appointed me to look after another visitor: Ted Shannon, J the former
Chief of Station in Panama and now Chief of the section of the CI staff in
headquarters responsible for CIA officers under AID Public Safety cover.
Shannon was the founder of the Inter-American Police Academy J in Panama
(which, incidentally, will be moving next year to Washington with a new name:
the International Police Academy }) and he was rather upset that we haven't been
fully using our Public Safety cover officer, John Burke. J Dean explained to
Shannon his fears about Burke's getting into trouble through his over-eagerness,
but after Shannon left Dean told me to start thinking about what operations we
can give to Burke. Dean is worried about criticism in headquarters that he's not
using his people, but in fact there's lots of work Burke can do. The first thing will
be to integrate him with the Special Forces interrogation team working on the
political prisoners.

Reinaldo Varea J returned to Ecuador yesterday but his troubles are far from
over. Immediately after the coup the junta cancelled the impeachment case
against Varea but announced that he would have to stand trial if he ever returned.
His return means that his trial begins again, and he has also agreed to refrain
from political activity. From Panama he had gone to Houston where a
headquarters' officer gave him termination pay, but if Dean needs to see him he
can establish contact through Qtto Kladensky. }

Manuel Naranjo was replaced as Ecuador's UN Ambassador and has also
returned. Headquarters was highly impressed with his work for us at the UN, and
Dean feels the same — in fact he's going to nominate Naranjo, who is now back at
work in the Socialist Party, for Career Agent status which would mean
considerable income, fringe benefits, job tenure and retirement pay.

Juan Sevilla, J Arosemena's Minister of the Treasury, is the only one of our
political-action assets in the old government to get a new job with the junta.
Probably because of his firm action during the months before the junta took over,
he's been named by the junta as Ecuador's new Ambassador to West Germany.

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We're forwarding the file to the Bonn station and making contact arrangements in
case they want to use him in Germany. A few weeks ago I gave Sevilla money for
Carlos Rendon, J his private secretary, who caught Roura and made the plant on
Flores. Apparently Rendon has been threatened and is going to leave the country
for a few months.

Lieutenant-Colonel Federico Gortaire was reassigned from Army commander
in Manabi province to Military Governor of Chimborazo Province. For the time
being we'll communicate with him through Jorge Gortaire in order to save time,
but Dean wants to have one of the new officers begin going directly to Riobamba
to see Colonel Gortaire as soon as possible.

Dean still refuses to intercede with the Minister of Government, Colonel Luis
Mora Bowen, on behalf of Cristobal Mogrovejo. Mogrovejo told the police that
he went to Cuba on our behalf, and his mother even came to see the Ambassador
but Dean is playing real dumb. I think he ought to help the poor guy out of that
stinking, miserable jail.

The country's honeymoon with the junta is fading fairly fast. The traditional
political parties are getting worried that the junta may stay in power longer than
they've admitted, and their massive promotions of military officers haven't been
very popular. Especially since among the first to be promoted were the junta
members themselves: now they are one colonel, one admiral and two generals.

Quito 15 October 1963

Labour operations are still unsettled because of the junta's arbitrary actions.
Since last month, a new national traffic law has been in preparation but the junta
refuses to consult the national drivers' federation (taxi, truck and bus drivers),
which will be the organization most affected by the law. Everyone understands
the need to stop the general traffic chaos and the carnage that so frequently
occurs on the roads, especially when overcrowded buses roll off the
mountainside because of their poor mechanical condition: traditionally, the
driver, if he's alive and can move, flies from the scene as fast as he can go. But
the drivers' federation is our top priority to woo away from the CTE and
eventually into the CEOSL. So we called Jack Otero } back from Rio de Janeiro
to see if he could intercede with the junta on the traffic law question, even though
the drivers' federation isn't affiliated with the ITF Something may come from the
effort, perhaps not with the junta but with the drivers' federation.

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Even the AIFLD operation is beset with problems. The country programme
chief here isn't an agent and so we can't guide him (except through Washington)
so that his programme harmonizes nicely with ours. Doherty finally came to help
straighten out the AIFLD programme for us, but this isn't the end of it. He's going
to arrange to have Emilio Garza, J the AIFLD man in Bogota who is a recruited
and controlled agent, come here for as long as is needed to make sure the AIFLD
programme is run the way Dean wants it run. Mostly it's a question of personnel
assignments through which we want to favour our agents. Sooner or later all the
AIFLD programmes will be run closely by the stations — until now the expansion
has been so fast that in many cases non-agents have been sent as AIFLD chiefs
and can only be controlled through cumbersome arrangements of the kind we've
had here.

Political prisoners are being released to go into exile as their cases are
reviewed. There are still well over one hundred of them — Flores and Roura are
both going to Chile in exile. Araujo finally got a safe conduct and left for Bolivia
a week ago. Echeverria is still in hiding, rejecting the bait we set with the Vargas
J Land Rover. Cardenas, Vargas, Basantes } and our other penetration agents
have somehow managed to avoid arrest.

For a few days last week our Popular Revolutionary Liberal Party agents
were also taken as political prisoners. They held a meeting in violation of the
government's prohibition of all political meetings without prior permission, and
among those arrested were Juan Yepez del Pozo, Jr., Carlos Vallejo Baez { and
Antonio Ulloa Coppiano. } They were only held for a couple of days and later
Vallejo and Ulloa admitted to me that they staged the whole thing for publicity.
Pete Palmer J is going to take over these agents so that next time they will
discuss this sort of caper with us first — otherwise they can't expect us to bail
them out if the junta is slow in letting them go.

Another new station officer arrived: Jim Wall, J an old friend who went
through the training programme with me at Camp Peary. Wall has just finished
two years under non-official cover in Santiago, Chile, as a university student.
He's going to take over some of my operations too — probably the ECACTOR
political-action agents His cover will be in the Embassy economic section, along
with Palmer.

The polygraph operators are now in Buenos Aires and Dean wants to be sure
that Medardo Toro } is 'fluttered'. Our impression is that the Buenos Aires station
isn't taking this case very seriously — undoubtedly they have plenty of Argentine

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problems to worry about. In order to see why production from the operation is
not better, Dean asked me to go to Buenos Aires to interpret for the polygraph
examination of Toro. I'll also go to Montevideo because Toro is taking the
treatment for his back there and has made contact on behalf of Velasco with an
officer of the Cuban Embassy in Montevideo.

Moscoso's visit brought good news for the Ecuadoreans — ten million dollars
in new loans from the Inter-American Development Bank have been announced
this month.

Quito 7 November 1963

It was a strange trip, disappointing on the Toro case but very encouraging for
my coming assignment in Montevideo. In Buenos Aires the station considers the
Toro case something less than marginal, just as we had suspected. About all we
can hope for is to have an officer from the station meet Toro occasionally to
receive his reports and pay his salary. In Montevideo it's worse — the Chief of
Station there, Ned Holman, J doesn't want anything to do with Velasco. Holman
was Noland's predecessor as Chief of Station in Quito so he's had plenty of
chance to get soured by Velasco. Even so, the case is interesting because Velasco
is opening a channel to the Cubans through Toro who has already met Ricardo
Gutierrez two or three times. Gutierrez is carried by the Montevideo station as
the Chief of the Cuban intelligence operation which the station believes is
targeted in large part towards Argentina and the guerrilla operations now going
on there. It will be interesting to see whether Velasco gets money from the
Cubans — it wouldn't be too unlikely, if he were to become a candidate again for
President, because he refused to break with Cuba and has often spoken highly of
Castro.

In Buenos Aires, besides interpreting on the Toro case I interpreted on two
other cases: one was a labour leader who is one of the station's best penetrations
of the Peronist movement and the other was an Argentine Naval intelligence
officer and his wife who are working together as a penetration of the Naval
intelligence service.

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Quito 10 November 1963

On 31 October, the national drivers' federation was required by the
government to undergo 'fiscal analysis', which means they're going to bring under
control the one organization that can stop the country completely It'll be a long
time before this union can be brought into the ITF. In fact it's not really a union
because many of its members are owners of taxis, trucks and buses and even
gasoline stations. Its orientation, then, is middle class rather than working class
but for our long-range planning it's the most important of the organized trade
groups to be brought under greater influence and control.

Bill Doherty J arranged for Emilio Garza, } the Bogota AIFLD agent, to
come to help us smooth out the problems between our CEOSL agents and the
AIFLD operation. The agent was an excellent choice and I've already
recommended that he be transferred to Ecuador when his assignment in Bogota
ends. He's the most effective of the career labour agents that I've worked with.

For the past six weeks there have been regular terrorist bombings, mostly
against government buildings. They started in Quito — five occurred in one week
in mid-October — but now they've spread to Guayaquil. None of our agents seems
to know what group is behind the bombings and Dean's getting jittery. It's
embarrassing because the bombings make the junta look inept in spite of all the
arrests and forced exiles.

The day after tomorrow I'm going to try to recruit Jose Maria Roura who's
been rotting away in the Garcia Moreno prison since May. He's being allowed to
leave the country and will fly to Guayaquil, then to Lima, La Paz, and eventually
to Chile.

Colonel Lugo has been in Quito for the past few weeks and he told me that
the police interrogators report that Roura is very depressed, even disillusioned,
about his political past. He is also extremely concerned about his family which is
completely destitute and living on the charity of friends. This information
coincides with what we've learned from the interrogation reports received
through other sources and from information on Roura's family obtained through
the PCE penetration agents. Lugo suggested to me that Roura may be ripe for a
recruitment approach but he doesn't think it should be made in the prison.

After discussing the possibilities, Dean asked me take the same Guayaquil-
Lima flight as Roura and to try my luck on the plane. We've arranged for
ECBLISS-1 } the Braniff manager in Guayaquil, who is an American and a base

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support agent, to have me seated next to Roura. Headquarters' approval just came
in and the Lima station is going to get the police to allow Roura to stay over for a
few days if he wants because he only has about two hours between arrival from
Guayaquil and departure for La Paz. For our purposes any possible follow-up
after the flight should be in Lima rather than La Paz. When I talk to him I'll invite
him to stay in Lima at my expense. After all these months in one of the world's
gloomiest prisons he might just accept. In any case it's worth the risk of a scene
on the plane — Roura is known to be extremely volatile — because we need a
penetration of the exile community in Santiago and Roura would be an excellent
source when he eventually returns here.

Quito 13 November 1962

It didn't go perfectly, but it wasn't a disaster either. I took the noon flight to
Guayaquil and to my surprise Roura was on the same flight under police guard.
Colonel Lugo had told me that Roura was going on the morning flight and the
last thing I wanted was to be seen in Quito by Roura or in any connection with
him at all. Arrangements by the base with the Braniff manager were perfect — he
was waiting for me at the airport at three o'clock this morning and gave me the
seat right next to Roura who would be released from his police guard when he
boarded the aircraft.

When I walked on the plane I was shocked to see that there were only about
ten passengers in the whole cabin. The stewardess conducted me to the seat next
to Roura, who was already there, and my planned introduction and cover story
began to crumble. I had wanted to begin the conversation as some anonymous
traveller striking up a conversation with another anonymous traveller. And I
wanted the seat next to Roura in case the flight were crowded — so that someone
else wouldn't be sitting in that seat. But now it was too obvious.

A seemingly endless silence followed after I sat down next to Roura. I tried
desperately to think of some new excuse to ease into a conversation — somebody
had to say something because I was clearly there for a purpose. Suddenly the
stewardess returned and suggested that I might like to move to where I could
sleep since row after row was vacant. Time for recovery and a new plan. I went
forward to a different seat, maybe ten rows ahead and began to get depressed.

We rolled down the runway and into the air. As the minutes began to go by,
five, ten, twenty; I felt more and more glued to my seat. I was going into a freeze

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and beginning to think up excuses, like bad security, to offer later for not having
talked to Roura. But somehow I had to break the ice and I finally stood up and
began walking back to Roura's seat, in mild shock as when walking into a cold
sea.

I introduced myself, using an alias and Roura agreed nonchalantly as I asked
if I could speak with him. I sat down and went into my new introductory routine,
relaxing a bit as I went on. I was an American journalist who had spent the past
few weeks in Ecuador studying the problems of illiteracy, disease and poverty for
a series of articles. At the airport before the flight, I learned to my happy surprise
that he was going to be on the same flight and I wondered if he would mind
discussing Ecuadorean problems with me from the point of view of a communist
revolutionary. I added that I knew of his arrest earlier in the year and I expressed
wonderment that such arbitrary and unfair proceedings could occur.

Over coffee we passed the flight discussing Ecuador. Roura spoke openly and
relaxedly and we seemed to be developing a little empathy. About twenty
minutes before we were to land in Lima I shifted the conversation to Roura's
personal situation. He told me that he was taking a connecting flight to La Paz
and after a few days would proceed to Santiago. He was bewildered over what to
do about his family and was expecting hard times in exile.

Now I had to make my proposal, ever so gently, but clear enough for Roura
to understand. I said I would be seeing friends in Lima who are in the same
profession, more or less, as I am. They too would probably like to speak with him
and I was certain that they would offer him a fee for an interview since they
represent a large enterprise. He was interested, but said he had permission from
the Peruvians only to remain in the airport until the connecting flight. I said my
friends could probably arrange permission for him to remain a few days and that
he should ask the immigration authorities if he could spend at least the day in
Lima and proceed to La Paz on a later flight perhaps tonight or tomorrow. Who
knows, I said, whether some kind of permanent financial support might be
arranged for him in Santiago and for his family in Quito. Perhaps, even, he could
arrange for the family to go to Santiago to live with him. I sensed he was taking
the bait and was beginning to understand.

When the 'fasten seat belt' light came on I took out a piece of paper with my
alias typed on it and the number of a post-office box in Washington. I said I
would be staying in Lima at the Crillon Hotel and if he was able to stay for a few
days he could call me at the hotel and we would continue talking. If not, he could

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always reach me through the post-office box. He didn't say he would ask the
airport authorities for permission to stay, but he didn't say no either. I thought he
was deciding to stay. As a final touch, something I hoped would convince him I
was knowledgeable, in fact I now hoped he realized I was CIA, I bade farewell
pointedly calling him 'Pepito', which is the name his PCE comrades call him. I
returned to my other seat for the landing.

At the terminal building I walked down the steps and headed for the entrance
where I was met by the Lima station officer who is in charge of liaison with
immigration authorities. He had arranged for permission to be granted if asked by
Roura, and indeed offered if Roura didn't ask — without, of course, creating
suspicion that we were trying to recruit Roura. From just inside the terminal
building we watched the Braniff aircraft because Roura had delayed inside.
Eventually he appeared, descended the steps, but suddenly turned and rushed
back up the steps and into the aircraft. At that moment about ten uniformed
police who had been striding swiftly, practically rushing, towards the aircraft
arrived at the steps. The leader boarded the aircraft and a long delay followed.
The Lima station officer went to see his airport police and immigration contacts
to find out what happened, and I went to the station offices in the Embassy to
await news from the airport. If Roura stayed, I would check into the Crillon and
wait for his call. If he proceeded to La Paz I would take the noon Avianca flight
back to Quito.

When I reached the Embassy they gave me the bad news. Roura had been
frightened by the police when they rushed towards him and thought something
terrible might happen. In the aircraft he refused to descend to the terminal until
the flight continued. Then he was extremely nervous in the terminal and
interested only inbeing sure he didn't miss the flight to La Paz which he took as
planned.

The Lima Chief of Station; Bob Davis, J apologized for the over-enthusiasm
of their liaison service — the police approaching the aircraft were only trying to
give him a warm welcome in preparation' for immigration's offer of permission to
stay for a few days. The Lima station botched the operation — I am convinced that
Roura would have stayed — and now we can only wait for a telegram or letter to
the post-box. On the other hand Dean is thinking of a follow-up visit to Roura
once he gets to Santiago.

At the Lima station I asked how the penetration operation of the MIR is
progressing — the one I had started in Guayaquil with the recruitment of Enrique

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Amaya Quintana. The Deputy Chief of Station, Clark Simmons, J is one of my
former instructors at Camp Peary and is in charge of the case. He told me that
Amaya's information is pure gold. He has pinpointed about ten base-camps and
caching sites plus identification of much of the urban infrastructure with full
details of each phase of their training and planning. The Lima station has a
notebook with maps, names and addresses, photographs and everything else of
importance on the MIR which the station considers to be the most important
insurgency threat in Peru. The notebook is in Spanish and is constantly updated
so that just at the right moment it can be turned over to the Peruvian military.

At the Lima station I sent a cable on the Roura recruitment to headquarters
with information copies to Quito and La Paz. Dean had already seen the cable
when I got back this afternoon and he's elated even though we can't be sure yet
that Roura has accepted. Tomorrow I'll get Bolivian and Chilean visas for quick
departure when Roura sends a telegram to the Washington post-box.

Quito 17 November 1963

It didn't take long to resolve the Roura recruitment. This morning we had a
cable from the La Paz station with the special RYBAT sensitivity indicator,
reporting that Roura was in a secret meeting with two of the leading Bolivian
communists. At the meeting he told them of my attempt to recruit him and he
said if he ever sees me again he'll kill me. One of the two Bolivians is an agent of
the La Paz station, it would seem, although possibly the source is an audio
operation. I won't need the visas now, but Dean still thinks Roura may change his
mind in six months or a year or two. At least he knows we're interested and he
has the post-box number.

I only have about three more weeks before leaving and as I turn over
operations to the three new officers I am also terminating a number of the
marginal cases — with provision, of course, for picking them up again if needed.

Among those I've terminated is Dr Philip Ovalle, Velasco's personal
physician and the cutout to Atahualpa Basantes, the PC E penetration agent.
Ovalle is getting senile and is probably the main reason why Basantes's reporting
has been in such a slide. Before termination I was able to get the Ambassador to
have Ovalle placed back on the list of approved physicians for visas (the consular
section had thrown him off because he sent some people with syphilis to the US),
or otherwise he might have been difficult. The chances of Velasco's coming back

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are now so slight that there's no reason to waste time seeing Ovalle for
information on the Velasquistas. I recruited a new cutout for Basantes who I think
can get the agent's reporting jacked up. He's Gonzalo Fernandez, J a former
Ecuadorean Air Force colonel who was military attache in London until he was
forced to retire for political reasons. As Basantes is also a former military officer
the chances are that they will work well together.

I also terminated the letter intercepts which 1 had taken back when the
administrative assistant left a couple of months ago. The agents were pretty
rattled at first but after I explained that we just don't have time for opening,
reading, photography, closing, plus the two meetings for pick-up and return —
they seemed to accept it. They liked the termination bonus and we made
arrangements for meetings every two or three months to pay for propaganda
they've burned. Not too bad at a couple of hundred dollars a ton. These postal
intercepts are a waste of time, in my opinion, and only the headquarters desks
that are ready to take anything, like the Cuban branch, will waste effort poring
over letters and testing for SW.

Tampa 10 December 1963

On the flight home I compared the existing situation in Ecuador with what I
met when I first arrived there. Noland practically wouldn't recognize the place
with all the growth. In the Quito station we now have eight officers, including
Gabe Lowe J who will arrive in the spring to fill the last new slot, as opposed to
five when I arrived, plus two additional secretaries, several new working wives
and an additional communications officer. In Guayaquil we still have only two
officers inside the Consulate but have added one officer outside. Now Dean plans
to add even more officers under non-official cover, particularly in Guayaquil. The
station budget has also risen dramatically — from about 500,000 dollars in 1960,
to almost 800,000 dollars now.

Operations are better now, too. The counter-insurgency programme has
improved, helped along by all the arrests, the exiling and the general repression
undertaken by the junta. We have some new operations under way — particularly
the new telephone tapping and military intelligence unit that Dean is setting up.
Many of these activities are carried out in cooperation with the junta which, in
turn, we have managed to penetrate through police and military officers and the
junta's chief stenographer whom we have on our payroll. It looks as if operations

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in the student field are going to improve, and in our labour operations, both
CEOSL and the AIFLD are well established in spite of all the problems they have
had to face. The best of our PCE penetration agents have survived and we have
added several more, including those of the Guayaquil base.

So far as the general political situation is concerned the position is even more
favourable. When I arrived in Ecuador, Araujo was Minister of Government and
for two and a half years the traditional parties made a mess of things, thus
encouraging the people to look for extremist solutions. All politicians, Velasco
and his followers, the Conservatives, the Social Christians, the Liberals and the
Socialists, had struggled for narrow sectarian interests, sometimes under the
leadership of our agents and close liaison contacts. But they failed to establish
through the democratic process the reforms to which they all paid at least lip-
service. Now, at last, these reforms can be imposed by decree and it seems
certain that the order imposed by the junta will speed economic growth. Land
reform is still the greatest need. In a report published earlier this year, the UN
Food and Agricultural Organization noted that some 800,000 Ecuadorean
families (over three million people) live in precarious poverty while 1000 rich
families (900 landowners and 100 in business and commerce) enjoy inordinate
wealth.

Notes:

1 . Wall against which people are executed by the firing-squad.

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Part Three

Washington DC 8 February 1964

One can't help being impressed on a first visit to the new headquarters
building out in Virginia. It's a twenty- or thirty-minute drive up the Potomac river
from Washington — very beautiful parkway along the cliffs with the headquarters
exit marked 'Bureau of Public Roads' as if to fool someone. The building itself is
enormous, about seven storeys with a somewhat 'H' shape, surrounded by high
fence and woods — extremely complicated to orient oneself on the inside. I read
that it was built for ten thousand employees and from the numbers of cars in the
vast parking lots it seems that number may already have been passed.

I spent two days with the Ecuadorean desk officer filling in the items that
never get into formal reporting and catching up somewhat on the changes in the
headquarters' bureaucracy. The most important change is the recent establishment
of a new Deputy Directorate, the DDS & T (for Science and Technology), which
was formed by merging the old Office of Scientific Intelligence and Office of
Research and Reports, both of the DDI, with several other offices. This new unit
has taken over all the processing of information and setting of requirements on
progress around the world in the different key fields of science and technology
with special emphasis, not surprisingly, on Soviet weapons-related developments.
It is also responsible for developing new technical collection systems. The
Deputy Directorate for Coordination has been eliminated.

The other major change is in the DDP [1] where the old International
Organizations Division and the Psychological and Paramilitary Staff merged and
adopted the new name: Covert Action Staff. Headquarters' coordination and
guidance for all CA operations (formerly known as PP operations) now centres in
this staff.

The people in the new CA staff, perhaps because many are veterans of the
traditional friction between 10 Division and the geographical area divisions over
activities of IOD agents in the field, have developed a new terminology that
provokes no little humour in headquarters' halls. Instead of calling their agents
agents anymore, they now insist in their memoranda and other documents on
calling them 'covert associates'. Problems relating to agent control — the old IOD
wound that would never heal — seem now to have diminished simply by not
calling CA operatives agents anymore.

Another change in the DDP that will take effect shortly is the merging of the
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will pass to the Near East Division. Now all the communist countries in Europe
will be in the same area division which will be called Soviet Bloc Division. The
communications indicator for action by SB Division is also changing: from
REDWOOD to REDTOP.

Also, there is a completely new DDP division called the Domestic
Operations Division (DOD) which is responsible for CIA intelligence collection
within the US (on foreign targets, of course). DOD engages mostly in recruiting
Americans for operations, e.g. recruitment of scientists and scholars for work at
international conferences. DOD has a 'station' in downtown Washington DC and
offices in several other cities.

In WH Division the big news is that Colonel J. C. King { is finally on his
way out as Division Chief. His power has gradually been chipped away since the
Bay of Pigs invasion by separating Cuban affairs from regular Division decision-
making and by surrounding King with various advisers such as Dave McLean, J
who was Acting Chief of Station in Quito when the junta took over, and Bill
Hood, J who has had the newly created job of Chief of Operations for the past
year. King is being replaced as Division Chief by one of the senior officers who
were brought into the Division after the Bay of Pigs from the Far East Division.
He is Desmond Fitz- Gerald, J Deputy Chief of WH Division for Cuban Affairs
— also a newly created job after the Cuban invasion. The regular Deputy Division
Chief, Ray Herbert, } continues to handle personnel assignments and matters not
related directly to operations against Cuba.

Washington DC 10 February 1964

I spent a night out at Jim Noland's house. They live in McLean not far from
headquarters — everyone seems to have moved out that way. After return to
headquarters Noland was assigned as Chief of the Brazil Branch in WH Division
— a key job, with Brazil's continuing slide to the left under Goulart. Noland made
several trips to Brazil last year and from what he says Brazil is the most serious
problem for us in Latin America — more serious in fact than Cuba since the
missile crisis.

Operations in Brazil haven't been helped by a Brazilian parliamentary
investigation into the massive 1 962 electoral operation, that began last May and
is still continuing in the courts. The investigation revealed that one of the Rio
station's main political-action operations, the Brazilian Institute for Democratic

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Action (IBAD) and a related organization called Popular Democratic Action
(ADET), J spent during the 1962 electoral campaign at least the equivalent of
some twelve million dollars financing anticommunist candidates, and possibly as
much as twenty million. Funds of foreign origin were provided in eight of the
eleven state gubernatorial races, for fifteen candidates for federal senators, 250
candidates for federal deputies and about 600 candidates for state legislatures.
Results of the elections were mixed, with station-supported candidates elected
governors in Silo Paulo and Rio Grande, both key states, but a leftist supporter of
Goulart was elected governor in the critical north-east state of Pernambuco. In
the Chamber of Deputies the balance among the three main parties stayed about
the same which in some ways was seen as a victory.

The parliamentary investigating commission was controlled somewhat — five
of its nine members were themselves recipients of IBAD and ADEP funds — but
only the refusal of the First National City Bank, J the Bank of Boston } and the
Royal Bank of Canada J to reveal the foreign source of funds deposited for
IBAD and ADEP kept the lid from blowing off. At the end of August last year
President Goulart decreed the closing of both ADEP and IBAD, and the
parliamentary report issued in November concluded that IBAD and ADEP had
illegally tried to influence the 1962 elections.

Washington DC 12 February 1964

For the past few days I've been shuttling between the Uruguayan desk and
the Cuban branch getting briefed on operational priorities against the Cubans, as
my primary responsibility in Montevideo will be Cuban operations. Only five
Latin American countries still have diplomatic relations with Cuba, and in
Montevideo operations against the Cubans are the highest priority on the Station
Related Missions Directive — the only station in the hemisphere where operations
against a Soviet Embassy are in second place on the priorities list. The reason is
that communist strength in Uruguay is growing considerably, particularly in the
trade-union field, and is undoubtedly assisted by the Cuban Embassy there.
Moreover, there have been strong indications that current guerrilla and terrorist
activities in the north of Argentina are being supported from the Cuban Embassy
in Montevideo.

Right now there are two main objectives for Cuban operations in
Montevideo. First, in order to promote a break in relations, we are using all

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appropriate operations to support the Venezuelan case against Cuba for
intervention and aggression based on the arms cache discovery on the Venezuelan
coast last November. The arms have since been traced to a Belgian manufacturer
who claimed to have sold them to Cuba. The purpose of the Venezuelan case is
eventually to get a motion through the OAS calling on all Latin American
countries with diplomatic relations with Cuba to break them. The hope is that
such a motion, coming from Venezuela and not the US, would have sufficient
momentum to get adopted by the OAS, particularly if enough propaganda of non-
US-origin can be generated over the coming months. For the sake of discretion I
haven't asked, but the whole campaign built around the arms cache has looked to
me like a Caracas station operation from the beginning. I suspect the arms were
planted by the station, perhaps as a joint operation with the local service, and
then 'discovered'.

While our overall objective in Uruguay is to effect a break in diplomatic
relations with Cuba, we must meanwhile penetrate their Cuban mission in
Montevideo either technically or by recruiting an agent, in order to obtain better
intelligence about their activities. We already have a number of valuable
operations going against the Cuban Embassy, but so far we haven't been able to
penetrate it technically or to recruit any of its officers.

Not that the station hasn't tried. Last year several cold recruitment
approaches were made and there was the unsolicited defection of Rolando
Santana. J Unfortunately, in the case of Santana, he had been in Montevideo only
a short while and had not had access to sensitive information because he wasn't
an intelligence officer. The case served nevertheless for propaganda operations.

On another occasion we very nearly recruited the officer believed to be the
Chief of Cuban Intelligence in Montevideo. This officer, Earle Perez Freeman, J
had spurned a cold street approach for recruitment last December in Montevideo
just before he was due to return to Cuba after some three years in Uruguay. In
Mexico, where he was awaiting a flight to Havana, he suddenly appeared in the
US Embassy and in discussions with station officers agreed to take asylum in the
US. The officer in charge was Bob Shaw, } one of my former instructors at
ISOLATION, and headquarters' halls are still reverberating over his carelessness.
After making all the arrangements to evacuate Perez in a military aircraft from
the Mexico City airport, Shaw took Perez in a car to the airport. On the way to
the airport Perez panicked, jumped out of Shaw's car and disappeared in a crowd.
No one yet can understand how Shaw failed to follow the first rule in cases like

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these: to place Perez in the back seat with other officers by the doors on either
side. Had he changed his mind before leaving Mexico City conversations in a
controlled situation could perhaps have convinced him to come. At least a sudden
panic and loss of contact would have been avoided. Perez returned to Havana and
there has been no sign that his short contact with the Mexico City station became
known to the Cubans, but opinion is unanimous in headquarters that the Mexico
City station did a remarkably inept job on the case — not even an initial debriefing
on Cuban operations in Montevideo.

On agent recruitment priorities in Montevideo the Cuban branch is most
interested in the code clerk whom the station has identified as Roberto
Hernandez. According to Division D officers in charge of Cuban communications
matters, the Soviets are supplying the Cubans with cryptographic materials that
are used for their diplomatic and intelligence traffic — impossible to break and
read. If I could get the code clerk recruited, they said, arrangements could be
made to have a headquarters technician copy the materials ('one-time' pads) for
safe return to the code-room. Traffic afterwards, and perhaps traffic before — now
stored by the National Security Agency for eventual breakthrough — could be
read.

Miami 14 March 1964

We divided our home leave between Janet's parents' home in Michigan and
mine here in Florida. Two weeks ago another son was born, right on the day
calculated by the doctor many months ago. Such joy — again everything went
perfectly. When the new baby is able to travel in a few weeks, Janet and the
children will fly to Montevideo, but I'm going now because the officer I'm
replacing is in a rush to leave.

On my way down to Montevideo I've stopped off here and spent most of
today discussing ways the JMWAVE (Miami) station can help our programme
against the Cubans in Montevideo. Charlie McKay, J the JMWAVE officer who
met me at the airport, suggested we spend the day discussing matters at the beach
instead of at the station offices at Homestead Air Force Base so we relaxed in the
sun until he finally brought me back to the airport. He was just the right person
for these discussions because he was assigned to the Montevideo station in the
early 1960s and is familiar with the operations there.

Miami CIA operations are vast but mainly, it seems, concerned with refugee
debriefmgs, storage and retrieval of information, and paramilitary infiltration-

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exfiltration operations into Cuba. They have both case officers and Cuban exile
agents who can assist hemisphere stations on temporary assignments for
recruitments, transcribing of audio operations and many other tasks. Just recently
the Montevideo station proposed that JMWAVE attempt to locate a woman who
could be dangled before the Cuban code clerk, who is exceptionally active in
amorous adventures. According to McKay they have just come up with the
candidate — a stunning Cuban beauty who has done this sort of work before. Next
week he will forward biographical data and an operational history on her,
together with the photograph he showed me, to the Montevideo station.

The main Miami operation related to Uruguay, however, is the AMHALF
project involving three Uruguayan diplomats assigned in Havana. They are the
Charge d' Affaires, Zuleik Ayala Cabeda, J and two diplomats: German Roosen,
J the Second Secretary, and Hamlet Goncalves, J the First Secretary. No one of
them is supposed to know that the others are working for the CIA but the Miami
station suspects they have been talking to each other. Their tasks in Havana
include arranging for asylum for certain Cubans, loading and unloading dead
drops used by other agents, currency purchase and visual observation of certain
port and military movements. Communications to the agents from Miami are
through the One- Way- Voice-Link (radio) but every week or two at least one of
them goes to Nassau or Miami on other tasks unrelated to the CIA, such as
bringing out hard currency and jewels left behind by Cuban exiles. Such
contraband serves as cover for their CIA work but adds to the sensitivity of this
operation — already extreme because of the implications of using diplomats
against the country to which they're accredited. The Department of State would
have no easy time making excuses to the Uruguayan government if this operation
were to blow.

Montevideo 15 March 1964

This is a marvellous city — no wonder it's considered one of the plums of WH
Division. Gerry O'Grady, J the Deputy Chief of Station, met me at the airport and
took me to the Hotel Lancaster in the Plaza de la Libertad where I stayed when I
came last year. We then went over to his apartment, a large seventh-floor spread
above the Rambla overlooking Pocitos beach, where we passed the afternoon
exchanging experiences. O'Grady came in January but his family won't be down
until after the children finish school in June. He's another of the transfers from

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the Far East Division — previous assignments in Taipei and Bangkok. Very
friendly guy

Montevideo 18 March 1964

Moving from the next-to-the smallest country in South America to the
smallest is nevertheless taking several giant steps forward in national
development, for contrast, not similarity, is most evident. Indeed Uruguay is the
exception to most of the generalities about Latin America, with its surface
appearance of an integrated society organized around a modern, benevolent
welfare state. Here there is no marginalized Indian mass bogged down in terrible
poverty, no natural geographic contradictions between coastal plantations and
sierra farming, no continuum of crises and political instabilities, no illiterate
masses, no militarism, no inordinate birth-rate. In Uruguay I immediately
perceive many of the benefits that I hope will derive from the junta's reform
programme in Ecuador.

Everything seems to be in favour of prosperity in Uruguay. The per capita
income is one of the highest in Latin America at about 700 dollars. Ninety per
cent of the population is literate with over ten daily newspapers published in
Montevideo alone. The country is heavily urban (85 per cent) with over half the
2.6 million population residing in Montevideo. Health care and diet are
satisfactory while social-security and retirement programmes are advanced by
any standards. Population density is only about one third of the Latin American
average and population growth is the lowest — only 1.3 per cent. Most important,
Uruguay's remarkable geography allows for 88 per cent land utilization, most of
which is dedicated to livestock grazing. Here we have a model of political
stability, almost no military intervention in politics in this century, and well-
earned distinction as the 'Switzerland of America'.

Uruguay's happy situation dates from the election in 1903 of Jose Batlle y
Ordonez, certainly one of the greatest and most effective of Western liberal
reformers, who put an end to the violent urban-rural struggle that plagued
Uruguay, as in much of Latin America, during the nineteenth century. To Batlle,
Uruguayans owe social legislation that was as advanced as any of its time; eight-
hour day; mandatory days of rest with pay each week; workers' accident
compensation; minimum wage; retirement and social security benefits; free,
secular, state-supported education. In order to set the pace in workers' benefits

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and to check concentration of economic power in the hands of private foreign
and national interests, Batlle established government monopolies in utilities;
finance and certain commercial and industrial activities. And in the political order
Batlle established the principle of co-participation wherein the minority Blanco
Party (also known as the National Party) could share power with Bathe's own
Colorado Party through a collegiate executive that would include members of
both parties. Through this mechanism patronage would be shared, fringe parties
excluded and bloody struggles for political control ended. It is to Batlle, then,
that Uruguayans attribute their political stability, their social integration, and an
incomes redistribution policy effected through subsidies, the social welfare
system, and the government commercial, financial and utility monopolies.

However, since about 1954 the standard of living in Uruguay has been
falling, the GDP has failed to grow, productivity and per capita income have
fallen, and industrial growth has fallen below the very low population growth
rate. Investment is only about 11 per cent of GDP, an indication, perhaps, of
Uruguayans' resistance to lowering their accustomed levels of consumption.
Nevertheless, declining standards of living of the middle and lower classes have
produced constant agitation and turmoil reflected in the frequent, widespread and
crippling strikes that have come to dominate national life.

What has happened in this most utopic of modern democracies? The
economic problem since the mid-1950s has been how to offset the decline of
world prices for Uruguay's principal exports: beef, hides and wool. Because
export earnings have fallen — they're below the levels of thirty years ago —
Uruguay's imports have been squeezed severely with rising prices of
manufactured and intermediate goods used in the substitution industries
established during the Depression and the 1945-55 prosperity. Result: inflation,
balance-of-payments deficits, economic stagnation, rising unemployment (now
12 per cent), currency devaluation.

In part Uruguay's problems are inevitable because recent prosperity was
based on the unusual seller's market during World War II and the Korean War.
However, the problems have been aggravated by certain government policies,
particularly the creation of new jobs in the government and its enterprises in
order to alleviate unemployment and to generate political support. Because of the
'three-two system' for distribution of government jobs (three to majority party
appointees and two to minority appointees) established during the 1930s, one
could fairly say that both parties are at fault for the current top-heavy

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administration. Indeed government employees grew from 58,000 in 1938 to
170,000 in 1955 to about 200,000 now. Because of attractive retirement and
fringe benefits the belief prevails that everyone has a right to a government job —
although salaries trail so far behind inflation that most government employees
need more than one job to survive. But the overall result has been deficit
financing for a public administration often criticized for ineptitude, slow action,
interminable paper-work, high absenteeism, poor management, low technical
preparation and general corruption.

Uruguay's system of paying for its state- employment welfare system is to
retain a portion of export earnings through the use of multiple currency-exchange
rates. Thus the exporter is paid in pesos by the central bank at a rate inferior to
the free market value of his products with the retention being used by the bank
for government operations. This system of retentions is at once a means for
income redistribution and the equivalent of an export tax damaging to the
competitiveness of the country's products in international markets. Retentions
also serve as a disincentive to the primary producing sector, the cattle and sheep
ranchers, who resist taxation to support the Montevideo government bureaucracy
and the welfare system. The result in recent years has frequently been for
ranchers to withhold wool and cattle from the market or to sell their products
contraband — usually across the unguarded border to southern Brazil.

The contradiction between rural and urban interests, aggravated by decline in
export earnings, resulted in Uruguay's falling productivity and declining standard
of living. In 1958, after almost 100 years in opposition, the Blanco Party won the
national elections in coalition with a rural pressure group known as the Federal
League for Ruralist Action or Ruralistas. This coalition instituted programmes to
favour exports of ranching products but with little success at first. In 1959 major
international credit was needed for balance-of-payments relief, and at the
insistence of the International Monetary Fund fiscal reforms were adopted in the
hope of stabilizing inflation, balancing trade and stimulating exports. The peso
was devalued, retentions on exports lightened, import controls established and
consumer and other subsidies curtailed. The recovery programme failed,
however, partly because industrial import prices continued to rise while inflation
and other ills have also continued. The peso, which was devalued from 1.5 to 6.5
per dollar in 1959, has continued to fall and is now down to about 18 per dollar.
The cost-of-living increase, a not extreme 15 per cent in 1962, went up by 33-5
per cent in 1963. In spite of continued economic decline, however, the Blancos

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were able to retain control of the executive in the 1 962 elections, largely because
of new government jobs created before the elections.

Perhaps more fundamental than the disincentives to ranchers and other
contradictions in the income redistribution policies is the dilution of Uruguayan
political power. The collegiate executive, conceived as a power-sharing
arrangement between the two major parties and as a safeguard against usurpation
of excessive authority, consists of nine members, six from the majority party and
three from the minority party. In practice, however, the National Council of
Government has many of the appearances of a third legislative chamber because
of the factionalism in the major parties promoted by the electoral system. The
current NCG, for example, consists of three members from one Blanco faction,
two from another and one from a third faction. The Colorado minority members
are similarly divided: two from one faction and one from another. Thus five
separate factions are represented on the executive, each with its own programme
and political organization. Ability of the executive to lead and to make decisions
is considerably limited and conditioned by fluctuating alignments of the factions,
often across party lines, on different issues.

The Legislature is similarly atomized and moreover self-serving. A special
law allows each senator and deputy to import free of duty a new foreign
automobile each year which at inflated Uruguayan prices means an automatic
double or triple increase in value. Legislation in 1961 similarly favoured
politicians, providing for privileged retirement benefits for political
officeholders, special government loans for legislators and exceptionally
generous arrangements for financing legislators' homes.

What are some of the solutions to this country's problems when already they
have so much going in their favour? Some degree of austerity is necessary, but
reforms are also needed in the government enterprises, the ranches, and, most of
all, in the executive.

The twenty-eight government enterprises, commonly known as the
autonomous agencies and decentralized services, are noted for inefficiency,
corruption and waste. For such a small country the scope of their operations is
vast: railways, airlines, trucking, bus lines, petroleum refining and distribution,
cement production, alcohol production and importation, meat packing, insurance,
mortgage and commercial banking, maritime shipping, administration of the port
of Montevideo, electricity, telephones and telegraphs, water and sewerage
services. Improved management and elimination of waste and corruption in the

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Central Administration — the various ministries as opposed to the autonomous
agencies and decentralized services — is without doubt equally important.

In the ranching sector two major problems must be solved: concentration of
land and income, and low capital and technology. On land concentration, some 5
per cent of the units hold about 60 per cent of the land while about 75 per cent of
the units hold less than 10 per cent of the land — the latifundia-minifundia
problem escaped Bathe's attention. Over 40 per cent of the land, moreover, is
exploited through some form of precarious tenure with the corresponding
disincentive to capitalize. Clearly the large landholdings must be redistributed in
order to intensify land use both for production and employment.

As for the executive, commentary has started on constitutional reform such
as a return to the one-man presidency or perhaps retention of the collegiate
system but with all members elected from the same party.

No one seems to know just how Uruguay will solve these problems but all
agree that the country is in an economic, political and moral crisis.

Montevideo 21 March 1964

The Montevideo station is about medium-sized as WH stations go. Besides
the Chief of Station, Ned Holman, J and O'Grady, we have four operations
officers (one each for Soviet operations, communist party and related groups,
covert-action operations and Cuban operations), a station administrative assistant,
two communications officers and three secretaries — all under cover in the
Embassy political section. On the outside under non-official cover we have two
US citizen contract agents who serve as case officers for certain FI and CA
operations.

Uruguay's advanced state of development, as compared with Ecuador, is
clearly reflected in the station's analysis of the operational environment which is
much more sophisticated and hostile than in poor and backward surroundings.
Although there are similarities in the stations' targets the differences are mostly
the greater capability of the enemy here.

The Communist Party of Uruguay (PCU)

In contrast to the divided, weak and faction-ridden Communist Party of
Ecuador, the PCU is a well organized and disciplined party with influence far

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beyond its vote-getting ability. Thanks in part to the electoral system (the ley de
lemas) the PCU has only minimal participation in the national legislature: three
seats of a total of 130. The party's strength is growing, however, largely because
of the deteriorating economic situation. Whereas in the 1958 elections the PCU
received 27,000 votes (2.6 per cent), in 1962 they received 41,000 (3.5 per cent).
Station estimates of PCU are also rising: from an estimated 3000 members in
1962 to about 6000 at the present — still less than the PCU claim of membership
in excess of 10,000.

The PCU's political activities are largely channelled through its political
front: the Leftist Liberation Front, better known as FIDEL (for Frente Izquierda
de Liberacion). Besides the PCU, FIDEL includes the Uruguayan Revolutionary
Movement (MRO) and several small leftist splinter groups. Ariel Collazo, the
principal leader of the MRO, holds a seat in the Chamber of Deputies which,
with the three PCU seats, brings FIDEL congressional representation to four.

Uruguay's exceptionally permissive political atmosphere allows free reign for
the PCU's activities in labour and student organizations as well as in the political
front. The party's newspaper, El Popular, is published daily and sold throughout
Montevideo — a fairly effective propaganda vehicle for the PCU's campaigns
against' North American imperialism' and the corruption of the traditional
Uruguayan bourgeois parties. While many communist parties are increasingly
rocked with splits along the Soviet- Chinese model, the PCU is only minimally
troubled and maintains unwavering support for the Soviets. Support for the
Cuban revolution and opposition to any break in relations with Cuba are principal
PCU policies.

The Uruguayan Workers Confederation (CTU)

Throughout its forty-odd years of existence the PCU has been active in the
Uruguayan labour movement, peaking in 1947 when the party controlled the
General Union of Workers which represented about 60 per cent of organized
labour. Following the death of Stalin, however, ideological division led to a
decline in PCU trade-union influence while the rival Uruguayan Labor
Confederation J (CSU), backed by the Montevideo station, became the
predominant organization. The CSU affiliated with ORIT f and the ICFTU, \ but
began to decline when the Uruguayan Socialist Party withdrew support and the
PCU renewed its organizational efforts. In the early 1960s under PCU leadership

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the CTU was formed, and it has now become by far the largest and most
important Uruguayan trade-union organization. Besides PCU leadership in the
CTU, left-wing socialists are also influential.

Major policies of the CTU are support for the Cuban revolution and
opposition to government economic policies, particularly the reform measures
adopted at the insistence of the International Monetary Fund (devaluation,
austerity) that hurt the lower-middle and low income groups. While only a small
percentage of the workers are communists (most workingmen vote for the
traditional parties), the PCU and other extreme-left influence in the CTU allows
for mobilization of up to several hundred thousand workers, perhaps half the
entire labour force, what with the prevalence of legitimate grievances. Action
may range from sitdown or slowdown strikes of an hour or two, to all-out
prolonged strikes paralysing important sectors of the economy. As should be
expected, the CTU is an affiliate of the Prague-based World Federation of Trade
Unions.

The Federation of University Students of Uruguay (FEUU)

The situation in the national student union is similar to the labour movement:
communists are a small minority of the student population but control the
federation. There are two institutions of higher learning in Uruguay, the
University of the Republic with an enrollment of about 14,000 and the National
Technical School (Universidad de Trabajo) with about 18,000, both in
Montevideo. FEUU activities, however, are concentrated at the University of the
Republic but extend into the secondary system. A PCU member is Secretary-
General of FEUU, and, when a cause is presented, large numbers of students can
be mobilized for militant street action and student strikes. Campaigns of the
FEUU include support for the Cuban revolution and CTU demands, and attacks
against' North American imperialism'.

The Socialist Party of Uruguay (PSU)

Although the pro-Castro PSU is waning as a political force in Uruguay — in
the 1 962 elections they were shut out of national office for the first time in many
years — it retains some influence among intellectuals, writers and trade unionists.
A considerable part of the Socialists' problem is internal dissention over peaceful
versus violent political action. A portion of PSU militants under Raul Sendic, the
leader of the sugar workers from Bella Union in northern Uruguay, have broken

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away and formed a small, activist revolutionary organization. They continue to
be weak, however, and Sendic is a fugitive believed to be hiding in Argentina.

The Uruguayan Revolutionary Movement (MRO)

Although the MRO participates in FIDEL with the PCU, it retains its
independence and a much more militant political posture than the PCU. Because
it is dedicated to armed insurrection it is considered dangerous, but it is thought
to have no more than a few hundred members which considerably limits its
influence.

Trotskyist and Anarchists

The Revolutionary Workers Party (POR) under Luis Naguil is the Trotskyist
group aligned with the Posadas faction of the Fourth International. They number
less than one hundred and their influence is marginal. A similarly small number
of anarchists led by the Gatti brothers, Mauricio and Gerardo, operate in
Montevideo, but they too merit only occasional station coverage.

Argentine Exiles

Uruguay, with its benevolent and permissive political climate, is a traditional
refuge for political exiles from other countries, especially Argentina and
Paraguay. Since the overthrow of Peron in 1955 Montevideo has been a safe
haven for Peronists whose activities in Argentina suffer from periods of severe
repression. The Buenos Aires station is considered rather weak in penetration
operations against the Peronists particularly those on the extreme left. The
Montevideo station, therefore, has undertaken several successful operations
against Peronist targets in Uruguay through which Cuban support to Peronists
has been discovered. One operation, an audio penetration of the apartment of
Julio Gallego Soto, an exiled Peronist journalist, revealed a clandestine
relationship between Gallego and the former chief of Cuban intelligence in
Montevideo, Earle Perez Freeman — the would-be defector in Mexico City. Our
station, in fact, has made the most important analysis of the complicated
arrangement of groups within Peronism — those of CIA interest are termed Left-

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Wing Peronists and Argentine Terrorists' — but current signs are that the
Argentine government is to allow Peronists to return, and much Argentine
revolutionary activity will soon begin moving back to Buenos Aires.

Paraguayan Exiles

To an even greater extent than the Argentine extremists, the Communist Party
of Paraguay (PCP) is forced to operate almost entirely outside its own country
Based mainly in Buenos Aires, Montevideo and Sao Paulo, the PCP is largely
ineffectual with only about 500 of its three to four thousand members living in
Paraguay Harassment and prison for PCP activists under the Stroessner
government is most effective. Nevertheless, the PCP has formed a political front,
the United Front for National Liberation (FULNA), which includes some non-
communist participation — mainly from the left wing of the Paraguayan Liberal
Party and from the Febrerista movement, neither of which is allowed to operate
in Paraguay. FULNA headquarters is in Montevideo.

The Soviet Mission

The Soviet Mission in Montevideo consists of the Legation, the Commercial
Office and the Tass representative. About twenty officers are assigned to the
Legation of whom only eight are on the diplomatic list of the Uruguayan Foreign
Ministry with the rest listed as administrative and support officials. Of the twenty
officers in the Embassy, twelve are known or suspected to be intelligence
officers: six known and two suspect KGB (state security), and two known and
two suspect GRU (military intelligence). The Commercial Office, located in a
separate building that is also used for Soviet Mission housing, consists of five
officers of whom two are known and one is suspect KGB. The Tass
representative is known KGB. Thus of twenty-six Soviets in Montevideo sixteen
are known or suspected intelligence officers, about the average for Soviet
missions in Latin America.

Targets for Soviet intelligence operations in Uruguay, other than the US
Embassy and the CIA station, are fairly obvious although station operations have
failed to turn up hard evidence except in rare circumstances. Thought to be high
on the Soviet priority list are support to the PCU and CTU, penetration of the
Uruguayan government and the leftist factions of traditional political parties

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through their 'agents of influence' programmes, propaganda publishing and
distribution throughout Latin America through the firm Ediciones Pueblos
Unidos among others, cultural penetration through various organizations
including the Soviet-Uruguayan Friendship Society, travel support through the
Montevideo office of Scandinavian Airlines System, and support for 'illegal'
intelligence officers sent out under false nationalities and identities.

The Cuban Mission

Like the Soviets, the Cubans have an Embassy and separate Commercial
Office, but Prensa Latina, the Cuban wire service, is operated by Uruguayans and
Argentines. The Embassy is headed by a Charge d'Affaires with four diplomats,
all either known or suspected intelligence officers. The Commercial Office is
operated by a Commercial Counsellor and his wife, both of whom are thought to
be intelligence officers. Contrary to Agency operations against the Soviets,
however, there is no known framework for classifying Cuban intelligence
operations, and practically nothing is known about the organizational structure of
Cuban intelligence.

Nevertheless, the Montevideo station has collected valuable information on
Cuban involvement with Argentine revolutionaries, and strong indications exist
that the Cubans are providing support from their Montevideo Embassy to current
guerrilla operations in northern Argentina. Other Cuban activities relate to the
PCU, CTU, FEUU, artists, intellectuals, writers and leftist leaders of the
traditional parties.

Other Communist Diplomatic Missions

Czechoslovakia, Poland, Bulgaria, Hungary, Romania and Yugoslavia also
have diplomatic missions in Montevideo. The Czechs are considered the most
important from a counter-intelligence viewpoint, but station personnel limitations
preclude meaningful operations against any of these other communist missions.

There is also an East German trade mission. Because of the higher priorities,
we don't cover their activities closely and the Chief of Station is trying through
the Minister of the Interior to have them expelled.

As I read the files and briefing materials on Uruguay it becomes clear that
the operational climate here, with the Soviet, Cuban and Czech intelligence

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services, and a sophisticated local political opposition in the PCU and related
organizations, is rather less relaxed than in Ecuador. Care will have to be taken in
operational security, especially in agent meetings and communications.
Nevertheless, as Uruguayans are generally well disposed to the US, and because
the station has a close relationship with the police and other security forces, the
operational climate is generally favourable.

Montevideo 22 March 1964

Until about a year ago the Montevideo station had the typical anti-communist
political operations found at other hemisphere stations, the most important of
which were effected through Benito Nardone, J leader of the Federal League for
Ruralist Action, and President of Uruguay in 1 960-6 1 . Other operations were
designed to take control of the streets away from communists and other leftists,
and our squads, often with the participation of off-duty policemen, would break
up their meetings and generally terrorize them. Torture of communists and other
extreme leftists was used in interrogations by our liaison agents in the police. An
outstanding success among these operations was the expulsion, in January 1961,
just before Nardone's term as NCG President ended, of the Cuban Ambassador,
Mario Garcia Inchaustegui, together with a Soviet Embassy First Secretary, for
supposedly meddling in Uruguayan affairs. The station's goal, of course, had
been a break in diplomatic relations but resistance was too strong among other
members of the NCG.

These operations had been expanded, much as the ECACTOR operations in
Ecuador, under Tom Flores J who arrived in 1960 as Chief of Station. However,
when Ambassador Wymberly Coerr arrived in 1962, he insisted that Flores put an
end to political intervention with Nardone and to the militant action operations
which had caused several deaths and given the communists convenient victims
for their propaganda campaigns against the 'fascist' Blanco government. Flores
resisted, and in 1963 Ambassador Coerr arranged to have him transferred and the
objectionable operations ended. Holman was sent to replace Flores, but he has
maintained a discreet communication with Nardone, only for intelligence
collection and without political-action implications. At this moment Nardone is
in the terminal stages of cancer and for all practical purposes operations with him
have ended.

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The rest of the station operational programme, however, covers all areas.
First the Related Missions Directive:

PRIORITY A

Collect and report intelligence on the strength and intentions of communist
and other political organizations hostile to the US, including their international
sources of support and guidance.

Objective 1: Establish operations designed to effect agent and/or technical
penetrations of the Cuban, Soviet and other communist missions in Uruguay.

Objective 2: Effect agent and/or technical penetrations at the highest possible
level of the Communist Party of Uruguay, the Communist Youth of Uruguay, the
Leftist Liberation Front (FIDEL), the Uruguayan Workers' Confederation, the
Socialist Party of Uruguay (revolutionary branch), the Federation of University
Students of Uruguay, the Uruguayan Revolutionary Movement (MRO) and
related organizations.

Objective 3: Effect agent and/or technical penetrations of the Argentine
terrorist and leftist Peronist organizations operating in Uruguay, the Communist
Party of Paraguay, the Paraguayan United Front for National Liberation
(FULNA) and other similar third-country organizations operating in Uruguay.

PRIORITY B

Maintain liaison relations with the Uruguayan security services, principally
the Military Intelligence Service and the Montevideo Police Department.

Objective 1: Through liaison services maintain intelligence collection
capabilities to supplement station unilateral operations and to collect information
on Uruguayan government policies as related to US government policies and to
the communist movement in Uruguay.

Objective 2: Maintain an intelligence exchange programme with liaison
services in order to provide information on communist and related political
movements in Uruguay to the Uruguayan government, including when possible
information from unilateral sources.

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Objective 3: Engage in joint operations with Uruguayan security services in
order to supplement station unilateral operations and to improve the intelligence
collection capabilities of the services.

Objective 4: Through training, guidance and financial support attempt to
improve the overall capabilities of the Uruguayan security services for collection
of intelligence on the communist movement in Uruguay.

PRIORITY C

Through covert-action operations: (1) disseminate information and opinion
designed to counteract anti-US or pro-communist propaganda; (2) neutralize
communist or extreme-leftist influence in principal mass organizations or assist
in establishing and maintaining alternative organizations under non-communist
leadership.

Objective 1: Place appropriate propaganda through the most effective local
media, including press, radio and television.

Objective 2: Support democratic leaders of labour, student and youth
organizations, particularly in areas where communist influence is strongest (the
Federation of University Students of Uruguay, the Uruguayan Workers'
Confederation) and where democratic leaders may be encouraged to combat
communist subversion.

Foreign Intelligence and Counter-intelligence Operations (FI-CI)

AVCAVE. Of the four agent penetrations of the Communist Party of
Uruguay, AVCAVE- 1 J is the most important, classified as 'middle-level' while
the others are' low-level'. The station's very limited success in running agents into
the PCU in comparison with other countries, Ecuador, for example, is due in
large part to the higher standard of living and welfare system: Uruguayan
communists simply are not as destitute and harassed as their colleagues in poorer
countries and thus are less susceptible to recruitment on mercenary terms. Of

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equal if not greater importance are the higher level of political sophistication in
Uruguay, superior party leadership, minimal internal party dissension and the
growth the party has experienced in recent years — there may even be a flicker of
revolutionary hope given the mess the traditional parties are making of the
country

Not that the station hasn't tried to get a 'high-level' agent. Periodic letter
recruitment campaigns and approaches by 'cold pitch' in the streets have been
undertaken regularly but without success. AVCAVE-l's access derives from his
membership of one of Montevideo's district committees and his close relation
with an incipient pro-Chinese faction. His position enables the station to
anticipate some PCU policies but he is far from the power locus of the
Secretariat. Of some interest, however, is AVCAVE-l's guard duty at PCU
headquarters.

AVPEARL. For many months Paul Burns,; the case officer in charge of
operations against the PCU, has been studying ways to bug the conference room
at PCU headquarters where meetings of the Secretariat and other sensitive
conversations are held. Through AVOIDANCE-9, J one of the low-level
penetration agents who is occasionally posted to guard duty at PCU headquarters,
the station has obtained clay impressions of the keys to the conference room from
which duplicate keys have been made. However, the twenty-four-hour guard
service at PCU headquarters renders an audio installation in the conference room
almost impossible by surreptitious entry.

AVOIDANCE-9 has also photographed the electrical installations in the
conference room, which the guards check on their rounds of the building, and the
station pouched to Washington identical electrical sockets of the bulbous,
protruding type used in Uruguay. The Technical Services Division in
headquarters is casting bugs (microphone, carrier-current transmitter and
switches all subminiaturized) into identical porcelain wall sockets of their own
manufacture. The Minox photographs of the conference-room sockets were also
needed so that the slightest details of painted edges and drops can be duplicated
on the bugs being cast at headquarters. Installation will consist simply in
removing the current sockets and replacing them with those cast by TSD. If
successfully installed the stereo audio signal will be transmitted down the electric
power line as far as the first of the large transformers usually located on utility
poles.

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A study of the power lines has also been made in order to determine which
apartments and houses are between the target building and the first transformer.
One of these locations will have to be acquired as Listening Post because radio
frequency (RF) signals cannot pass through the transformer. Several agents
already tested in support operations are being considered for manning the LP.
AVOIDANCE-9, however, has been kept as unaware as possible of the true
nature of this operation because he is extremely mercenary, and there is some
concern that he might use his knowledge of the installation, if he made it, to
blackmail the station later. Thus AVCAVE- 1 , J whose loyalty is of a higher type,
was instructed to volunteer for guard duty and he too is now spending one or two
nights per month in a position to make the AVPEARL installation. At this
moment the station is awaiting the devices from headquarters for testing before
installation.

AVBASK. The station's only penetration of the Uruguayan Revolutionary
Movement (MRO) is Anibal Mercader, J a young bank employee developed and
recruited by Michael Berger, f the officer whom I am replacing. The agent's
information is generally low-to-middle-level because he is some distance from
the MRO leadership. He is well motivated, however, and there is some hope that
he could rise within this relatively small organization. Nevertheless, as the MRO
is terrorist-oriented there may be a problem over how far the agent should go,
even if willing, in carrying out really damaging activities for his organization.
The agent, moreover, is torn between emigrating to the US (where his banking
talents could provide a decent income) and remaining in Uruguay where he faces
only turmoil and strain.

AVBUTTE. This is the support and administrative project for all matters to
do with a US citizen who is working under contract as an operations officer. His
name is Ralph Hatry J and he is involved in FI operations. His cover is that of
Montevideo representative for Thomas H. Miner and Associates, } a Chicago-
based public relations and marketing firm. Hatry, who is about sixty years old,
has a long history of work with US intelligence, including an assignment in the
Far East under cover of an American oil company. The immediate background to
his assignment to Montevideo was a difficult contract negotiating period, in
which Gerry O'Grady, the Deputy Chief of Station, was involved, and which
revealed Hatry to be a very difficult person but with important sponsor. The

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Assistant DDP, Thomas Karamessines, J gave instructions to find Harry a job
somewhere and his file was circulated, eventually landing on the Uruguayan
desk.

Hatry came to Montevideo last year and has been causing problems
continuously, for the most part related to his personal finances and his efforts to
increase fringe benefits. Holman, the Chief of Station, is trying to keep as much
distance as possible between Hatry and himself — the opposite of Hatry's efforts.
Because Berger is the junior officer in the station he was assigned to incorporate
Hatry into his operations and to handle his needs in the station, and as is often the
case with officers under nonofficial cover, the time involved in solving his
problems inside the station practically wipes out the advantage of having him in
the field. Nevertheless, Hatry is handling four operations: a letter intercept, an
exiled Paraguayan leader, several penetration agents of the Paraguayan
Communist Party and FULNA, and an observation post at the Cuban Embassy.

AVBALM. The contact in this operation is Epifanio Mendez Fleitas, the
exiled leader of the Paraguayan Colorado Party. Although the Colorado Party
provides the political base for the Stroessner dictatorship, Mendez Fleitas' past
efforts to promote reform and to unite Colorados against Stroessner have earned
him a position of leadership in the exile community. He is chiefly dedicated to
writing and to keeping together his Popular Colorado Movement (MOPOCO)
which he formed several years ago. We keep this operation going in Montevideo
in order to assist the Asuncion station and headquarters in following plotting by
Paraguayan exiles against General Stroessner.

AVCASK. This operation is also targeted against Paraguayan exiles,
specifically the Communist Party of Paraguay (PCP) and FULNA, The principal
agent, AVCASK- 1, J is active in a leftist group within the Paraguayan Liberal
Party, and he reports on leftist trends within the party while serving as cutout and
agent-handler for two lesser agents, AYCASK-2 $ and AYCASK-3. J
AVCASK-2 is also a Liberal Party member but he works in FULNA and reports
to AVCASK- 1 on FULNA and PCP work in FULNA. AVCASK-3 is a PCP
member who is currently moving into a paramilitary wing that is preparing for
armed action against the Stroessner government. Only AVCASK- 1, of these three
agents, knows that CIA is the sponsor of the operation and he uses his own
Liberal Party work as cover for the instructions and salaries he pays the other

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two. Yearly cost of this project is about five thousand dollars. Hatry meets with
AVCASK- 1 and reports back to Michael Berger.

AVIDITY. The station letter intercept provides correspondence from the
Soviet bloc, Cuba, Communist China and certain other countries according to
local addressee. The principal agent is AVANDANA, J an elderly man of many
years' service going back to Europe during World War II. He receives the letters,
which come from AVIDITY-9 J and AVIDITY- 16, $ both of whom are
employees of Montevideo's central post office. AVANDANA meets one of the
sub-agents each day, receiving and returning the correspondence. Payment is
made on the basis of the numbers of letters accepted.

The letters are processed by AVANDANA at his home, where he has photo
equipment and a flat-bed steam table. He writes summaries of the letters of
interest which he passes with microfilm to Hatry who passes them to Berger. This
operation costs about 10,000 dollars per year.

AVBLINKER. When the station decided to set up an observation post in
front of the Cuban Embassy it was decided to man the OP with AVENGEFUL-7,
J who is the wife of AVANDANA, his assistant in the AVIDITY letter intercept,
and an occasional transcriber for the AVENGEFUL telephone-tapping operation.
The OP is in a large house across the street from the Embassy in the elegant
Carrasco section of Montevideo. The station pays the rent for AVBLINKER- 1
and 2, an American couple who live in the OP house (the husband is employed
by an Uruguayan subsidiary of an American company) and AVENGEFUL-7
spends each day in an upstairs front-room taking photographs of persons entering
and leaving, and maintaining a log with times of entry and exit and other
comment that she reconciles with the photographs which are processed by
AVANDANA. AVENGEFUL-7's work with US intelligence also goes back to
World War II days when she worked behind enemy lines in Europe.

In addition to the logs and photographs, AVENGEFUL-7 also serves as a
radio base for the AVENIN surveillance team which works most of the time on
Cuban targets. From the Op she signals by radio when the subject to be followed
leaves the Embassy — with different signals if by foot, by car, or by one street or
another. The team waits in vehicles four or five blocks away and picks up the
subject. The logs and photographs are passed to Hatry who also passes back
instructions on surveillance targets.

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AVENIN. The station has two surveillance teams, the oldest and most
effective being the AVENIN team directed by Roberto Musso. J The team
consists of seven surveillance agents, one agent in the state-owned electric
company, and one agent in the telegraph company who provides copies of
encoded telegrams sent and received by the Soviet bloc missions through
commercial wire facilities. Most of the surveillance agents, like Musso, are
employees of the Montevideo municipal government, and communications and
instructions are passed by Paul Burns, the case officer in charge, at a safe office
site a block from the municipal palace.

The team is well trained and considered to be one of the best unilateral
surveillance teams in WH Division. Vehicles include two sedans and a
Volkswagen van equipped with a periscope photography rig with a 360-degree
viewing capability for taking pictures and observations through the roof vent.
Concealed radio equipment is also used for communication between the vehicles,
between the vehicles and the OP at the Cuban Embassy, and between the vehicles
and the people on foot. These carry small battery-operated transmitter-receivers
under their clothing and can communicate with each other as well as with the
vehicles. They are also trained and equipped for clandestine street photography
using 35-mm automatic Robot cameras wrapped to form innocuous packages.

The AVENIN team was formed in the mid-1950s with the original nucleus of
agents coming from part-time police investigators. Until last year, when a new,
separate team was formed, the AVENIN team was almost constantly assigned to
follow Soviet intelligence officers or related targets. Their most sensational
discovery was a series of clandestine meetings between an official of the
Uruguayan Foreign Ministry and a Soviet KGB officer in which all the
clandestine paraphernalia of signals and dead drops had been used. Photographs
and other evidence passed by the station to Uruguayan authorities led to
expulsion of the Soviet officer and considerable propaganda benefit. Last year,
however, the AVENIN team was taken off Soviet targets and assigned to the
Cubans, partly because of increasing importance of the Cubans and partly
because the team was considered to be fairly well blown to the Soviets.

The AVENIN agent in the electric company is valuable because he has access
to lists of persons who are registered for electric service at any address in
Montevideo. Not only are the lists helpful in identifying the apartments or offices
where surveillance subjects are followed, but the lists are also used to check
building security of potential safe sites. The same agent also provides on request

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the architect's plans for any building served by the electric company and these
plans are used for planning audio installations or surreptitious entries for other
purposes. The same agent, moreover, can be called upon to make routine
electrical inspection visits, ostensibly for the electric company, which gives him
access to practically any office, apartment or house in Montevideo for inside
casings.

AVENGEFUL. The station telephone-tapping operation is effected through
the AVALANCHE liaison service (the Montevideo Police Department) with a
history dating back to World War II when the FBI was in charge of counter-
intelligence in South America. This is currently the most important joint
operation underway between the station and an Uruguayan service. Connections
are made in telephone company exchanges by company engineers at the request
of the police department. A thirty-pair cable runs from the main downtown
exchange to police headquarters where, on the top floor, the listening post is
located.

The chief technician, Jacobo de Anda, J and the assistant technician and
courier, Juan Torres, J man the LP, which has tables with actuators and tape-
recorders for each of the thirty pairs. Torres arranges for lines to be connected by
the telephone company engineers and he delivers the tapes each day to another
courier, AVOIDANCE, } who takes them around to the transcribers who work
either at home or in safe site offices. This courier also picks up the transcriptions
and old tapes from the transcribers and passes them to Torres who sends them to
the station each day with yet another courier who works for the Intelligence
Department of the police. The police department thus arranges for connections
and operates the LP.

The courier AVOIDANCE is a station agent known only to Torres among the
police department personnel involved. Each of the transcribers is unknown to the
police department but copies of all the transcriptions, except in special cases, are
provided by the station to the police intelligence department. Each operations
officer in the station who receives telephone coverage of targets of interest to him
is responsible for handling the transcribers of his lines: thus the Soviet operations
officer, Russell Phipps, } is in charge of the two elderly Russian emigres who
transcribe (in English) the Soviet lines; the CP officer, Paul Burns, J is in charge
of the transcriber of the PCU line; and the Cuban operations officer is in charge

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of the transcribers of the Cuban lines. Most of the transcribers are kept apart from
one another as well as from the police department.

The station, which provides technical equipment and financing for the
operation, deals directly with the Chief of the Guardia Metropolitana, who is the
police department official in overall charge of the telephone-tapping operation.
He is usually an Army colonel or lieutenant-colonel detailed to run the Guardia
Metropolitana, the paramilitary shock force of the police. Currently he is Colonel
Roberto Ramirez. J Usually he assigns lines to be tapped as part of his operations
against contraband operations which also provides cover for the station lines
which are political in nature. Torres and de Anda work under the supervision of
the Chief of the Guardia Metropolitana although approval in principle for the
operation comes from the Minister of the Interior (internal security) and the Chief
of the Montevideo Police Department. The station encourages the use of
telephone tapping against contraband activities not only because it's good cover
but also because police contraband operations are lucrative to them and such
operations tend to offset fears of political scandal depending upon who happens
to be Minister of the Interior at any particular time.

Only seven lines are being monitored right now. They include three lines on
Soviet targets (one on the Embassy, one on the Consulate and another that
alternates between a second Embassy telephone and the Soviet Commercial
Office), two on Cuban targets (one on the Embassy and one on the Commercial
Office), one on a revolutionary Argentine with close associations with the
Cubans, and one line assigned to the headquarters of the Communist Party of
Uruguay.

Security is a serious problem with the AVENGEFUL operation because so
many people know of it: former ministers and their subordinates, former police
chiefs and their subordinates, current officers in the Guardia Metropolitana and
the Criminal Investigations and Intelligence Departments. Copies of the
transcriptions prepared for the police intelligence department are considered very
insecure because of the poor physical security of the department despite
continuous station efforts to encourage tightening. Regular denunciations of
telephone tapping by the police appear in the PCU newspaper, El Popular, but
without the detail that might require shutting down the operation.

Telephone tapping in Montevideo, then, is very shaky with many possibilities
for serious scandal.

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AVBARON. The station's only agent penetration of the Cuban mission is a
local employee who began working for the station as a low-level penetration of
the PCU. He is Warner, { the Cuban Embassy chauffeur, whose mother works at
the Embassy as a cook. About two months ago the Cubans fired their chauffeur
and the station instructed this agent to try, through his mother, to get hired by the
Cubans as their new chauffeur. Paul Burns, the station officer in charge, arranged
for a crash course in driving lessons and suddenly this agent became a very
important addition to the operational programme against the Cubans. Through his
mother's pleading he was hired, and in spite of an accident the first day he was
out with the Embassy car, he has gained steadily in their confidence. Although he
does not have access to documents or sensitive information on Cuban support to
revolutionaries, he is reporting valuable personality data on Cuban officials as
well as intelligence on security and other procedures designed to protect the
Embassy and the Commercial Department. Meetings are held directly between
the station officer and the agent, usually in a safe apartment site or an
automobile.

ECFLUTE. The only potential double-agent case against the Cuban
intelligence service here is Medardo Toro, J the Ecuadorean sent to Buenos Aires
by the Quito station to report on exiled former President Velasco. Although Toro
claims to have established a channel from Velasco to the Cuban government
through Ricardo Gutierrez Torrens, a Cuban diplomat believed to be their chief of
intelligence in Montevideo, and the Quito station and headquarters as well are
extremely interested in monitoring the channel for signs of possible Cuban
support to Velasco, Ned Holman, the Montevideo Chief of Station, continues to
avoid handling the case in Montevideo. His reasoning is that we already have
more than enough work to do and he is afraid to open the door to still more
coverage of exiles. For the time being Toro's meetings with Gutierrez will be
monitored through reports sent by pouch from Buenos Aires.

AVBUSY/ZRKNICK. The most important counter-intelligence case against
the Cubans in Montevideo consists of the monitoring of the mail of a known
Cuban intelligence support agent. The case started in 1962 when encoded radio
messages began from Havana to a Cuban agent believed to be located either in
Lima or La Paz. The National Security Agency is able to decrypt the messages
which contain interesting information but fail to reveal the identity of the agent

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who receives them. In one of the messages Havana control gave the name and
address of an accommodation address in Montevideo to which the agent should
write if necessary, including a special signal on the envelope to indicate
operational correspondence. The addressee in Montevideo is Jorge Castillo, a
bank employee active in the FIDEL political front, and the signal is the
underlining of Edificio Panamerica no where Castillo lives. Operational
correspondence is expected to be written in secret writing.

In order to monitor this communications channel, should it be activated, the
station has recruited the letter carrier who serves Castillo. Because the letter
carrier, AVBUSY-1, J cannot be told of the special signal on the envelope (since
it came from a sensitive decrypting process) the station officer has to review all
the mail sent to Castillo — a very time-consuming process. So far no operational
correspondence has been intercepted, but headquarters correspondence indicates
that successful identification has been made of Cuban agents in similar
ZRKNICK cases. (ZKRNICK is the cryptonym used for the entire
communications monitoring operation against Cuban agents in Latin America.)

AVBLIMP. The Soviet Embassy here is a large mansion surrounded by a
garden and high walls. In order to monitor the comings and goings of Soviet
personnel, especially the intelligence officers, the station operates an observation
post in a high-rise apartment building about a block away and in front of the
Embassy. The OP operators are a married couple who live in the o P as their
apartment and divide the work: keeping a log of entries and exits of Soviet
personnel, photographing visitors and the Soviets themselves from time to time,
photographing the licence plates of cars used by visitors, signalling the
AVBANDY surveillance team by radio in the same manner as the OP signals the
AVENIN team at the Cuban Embassy. The AVBLIMP op also serves for special
observation of the superior-inferior relationships among Soviet personnel, which
requires long training sessions with the Soviet operations officer. Such
relationships are vital for identifying the hierarchy within the KGB and GRU
offices. The apartment is owned by a station support agent who ostensibly rents it
to the OP couple as their living-quarters.

AVBANDY. The new (1963) surveillance team formed to operate against the
Soviets and Soviet-related targets consists of a team chief who is an Army major
and five other agents. The team has two sedans and communications equipment

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similar to that used by the AVENIN team, with coordination when appropriate
with the AVBLIMP observation post. The team chief, AVBANDY-1, originally
came to the attention of the station through the liaison operations with the
Uruguayan military intelligence service, and after a period of development he
was recruited to lead the new team without the knowledge of his Army chiefs.
The team is currently undergoing intensive training by Eziquiel Ramirez, J a
training officer from headquarters who specializes in training surveillance teams.
His period with the AVBANDY team will total about eight weeks by the time he
is finished next month.

AVERT. For some years the station has owned, through AVERT- 1 , a support
agent, the house that is joined by a common wall to the Soviet Consulate. The
Consulate and the AVERT house are the opposite sides of the same three-storey
building that is divided down the middle. The building is situated next to the
Soviet Embassy property and backs up to the Embassy backyard garden. In the
Consulate, in addition to offices, two Soviet families are housed, including the
Consul who is a known KGB officer. The AVERT house has been vacant for
several years and has been used operationally only for occasional visits by
technicians with their sophisticated equipment for capturing radiations from
Soviet communications equipment in the Embassy. When successful such
electronic operations can enable encoded communications to be read but we
haven't been successful so far in Montevideo.

Recently there has been considerable indecision about what to do with the
AVERT property: whether to use it as an additional OP, since it allows for
observation of the garden where Soviet officers are known to have discussions;
whether to use it to bug the Consulate offices and living- quarters; whether to sell
it; or whether to retain it for some unknown future use. For the time being it is
being retained for possible future use although the station strongly suspects that
the Soviets are aware that it is under our control. They have, in fact, probably
bugged our side as a routine matter of protection.

SOVIET ACCESS AGENTS

The weakest aspect of Soviet operations in Montevideo is the access agent
programme — Uruguayans or others who can develop personal relationships with
Soviet officials in order to report personality information, and, if appropriate, to

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recruit or induce defection. Although three or four station agents are in contact
with Soviet officers their relationships are weak and their reporting scanty.

AVDANDY. Part of the station programme against the Cubans, Soviets and
other communist diplomatic missions in Montevideo is keeping up-to-date
photographs and biographical data on all their personnel. Although the
observation posts against the

Cubans and Soviets provide good photographs, their use is limited because of
the necessity to protect the OP's. The Uruguayan Foreign Ministry, on the other
hand, obtains identification photographs on all foreign personnel assigned to
diplomatic missions in order to issue the identity card that each is supposed to
carry. AVDANDY- 1, { is a medium-level official of the Foreign Ministry who
gives copies of all these photographs to the Chief of Station as well as tidbits of
information. Although efforts have been made to obtain passports of communist
diplomatic personnel for a period long enough to photograph them, this agent has
been reluctant to take the added risk of lending the passports when they are sent
with the application. Nevertheless his willingness to turn over the Foreign
Ministry Protocol Office files for copying in the station is a valuable, if routine,
support function.

ZRBEACH. One of the activities of the CIA in support of the National
Security Agency's code-cracking task is to maintain teams of radio monitors in
certain US embassies. Often but not only where Soviet diplomatic missions exist,
CIA stations include a contingent of monitors who scan frequencies with
sophisticated equipment and record radio communications which are passed to
NSA for processing. The programme is called ZRBEACH. Such a team has been
operating for some years in the Montevideo station. The monitors also place
mobile stations as close as possible to target-encrypting machines for capturing
radiations - as in the use of the AVERT house next to the Soviet Embassy here.
ZRBEACH teams work under the direction of Division D of the DDP although
locally they are supervised by the Chief of Station.

When Ned Holman arrived in Montevideo he recommended that the
ZRBEACH team be withdrawn for lack of production. Gradually their activities
were curtailed and in recent weeks they have been packing equipment. Several
have already departed for other stations and soon Fred Morehouse, | the
ZRBEACH team chief, will leave for his new assignment in Caracas.

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AVBALSA. Liaison with the Uruguayan military intelligence service is in
charge of Gerry O'Grady, the Deputy Chief of Station, who meets regularly with
Lieutenant-Colonel Zipitria, J the deputy chief of the service. Holman also
occasionally meets Zipitria and when necessary Colonel Carvajal, | the military
intelligence service chief. For some years the Montevideo station has tried to
build up the capabilities of his liaison service through training, equipment
donation and funding but with very little success. Even now, their main collection
activity is clipping from the local leftist press. The main problem with this
service is the Uruguayan military tradition of keeping aloof from politics, as is
shown by Carvajal's reluctance to engage the service in operations against the
PCU and other extreme-left political groups. On the other hand the Deputy Chief,
Zipitria, is a rabid anti-communist whose ideas border on fascist-style repression
and who is constantly held in check by Carvajal. For the time being the station is
using the Deputy Chief as a source of intelligence on government policy towards
the extreme left and on rumblings within the military against the civilian
government. Hopefully Zipitria will some day be chief of the service.

AVALANCHE. The main public security force in Uruguay is the
Montevideo Police Department - cryptonym AVALANCHE — with which liaison
relations date to just before World War II when the FBI was monitoring the
considerable pro-Nazi tendencies in Uruguay and Argentina. In the late 1 940s,
when the CIA station was opened, a number of joint operations were taken over
from the FBI including the telephone-tapping project. Although police
departments exist in the interior departments of Uruguay, the technical
superiority and other capabilities of the Montevideo police almost always
produce decisions by Ministers of the Interior that important cases be handled by
AVALANCHE even when outside Montevideo.

As in Ecuador, the Minister of the Interior is in charge of the police, and
station liaison with civilian security forces begins with the Minister, currently a
Blanco politician named Felipe Gil J whom Holman meets regularly. Holman
also meets regularly, or whenever necessary, Colonel Ventura Rodriguez, J Chief
of the Montevideo Police; Carlos Martin, J Deputy Chief; Inspector Guillermo
Copello, } Chief of Investigations; Inspector Juan Jose Braga, J Deputy Chief of
Investigations; Commissioner Alejandro Otero, J Chief of the Intelligence and
Liaison Department; Colonel Roberto Ramirez, J Chief of the Guardia

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Metropolitana (the anti-riot shock force); Lieutenant-Colonel Mario Barbe, J
Chief of the Guardia Republicana (the paramilitary police cavalry); and others.
Of these the most important are the Minister, Chief of Police, Chief of
Intelligence and Liaison and Chief of the Guardia Metropolitana, who supervises
the telephone-tapping operation.

As in Argentina, the political sensitivity of an AID Public Safety Mission for
improving police capabilities has precluded such a Mission in Uruguay and
restricted police assistance to what overall demands on station manpower allow.
But whereas in Argentina a non-official cover operations, officer has for some
years been ostensibly contracted by the Argentine Federal Police } to run
telephone-tapping and other joint operations, in Uruguay these tasks have been
handled by station officers under official cover in the Embassy. Until January all
the tasks relating to AVALANCHE were handled by the Deputy Chief of Station,
but Holman took over these duties when Wiley Gilstrap, { the Deputy, was
transferred to become Chief of Station in San Salvador and replaced by O'Grady,
whose Spanish is very limited. The station long-range plans continue to be the
establishment of an AID Public Safety Mission that would include a CIA officer
in order to release station officers in the Embassy for other tasks. However, such
a development will have to wait until a strong Minister of the Interior who will
fight for the Public Safety Mission appears on the scene. On the other hand
Uruguayan police officers are being sent by the station for training at the Police
Academy, which has changed its name to the International Police Academy and
is moving from Panama to Washington.

Of the activities undertaken by the police on behalf of the station, the most
important is the AVENGEFUL telephone-tapping operation. Other activities are
designed to supplement the station unilateral collection programme and to keep
the police from discovering these operations. Apart from telephone tapping these
other activities are effected through the Department of Intelligence and Liaison.

Travel Control. Each day the station receives from the police the passenger
lists of all arrivals and departures at the Montevideo airport and the port where
nightly passenger boats shuttle to Buenos Aires. These are accompanied by a
special daily list of important people compiled by I & E personnel, including
those travelling on diplomatic passports, important political figures, communists
and leftists and leaders of the Peronist movement. On request we can also obtain
the lists of travellers who enter or leave at Colonia, another important transit

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point between Montevideo and Buenos Aires. Daily guest lists from the hotels
and lodgings in Montevideo are also available. The main weakness in travel
control is at the Carrasco airport, which is the main airport for Montevideo but is
in the Department of Canelones just outside the Department of Montevideo, and
there is considerable rivalry between the Montevideo and the Canelones police.
More important, however, is the lucrative contraband movement at the airport
which jealous customs officials protect by hampering any improvement of police
control. Thus station efforts to set up a watch list and a document photography
operation at the airport have been unsuccessful.

Name Checks. As a service to the Embassy visa office, information is
requested constantly from the police department, usually on Uruguayans who
apply for US visas. Data from the intelligence and criminal investigations files is
then passed by the station to the visa office for use in determining whether visas
should be granted or denied.

Biographical Data and Photographs. Uruguay has a national voter
registration that is effectively an identification card system. From the
AVALANCHE service we obtain full name, date and place of birth, parents'
names, address, place of work, etc., and identification photos of practically any
Uruguayan or permanent resident alien. This material is valuable for surveillance
operations of the AVENIN and AVBANDY teams, for the Subversive Control
Watch List and for a variety of other purposes.

Licence Plate Data. A further help to station analysis of visitors to the Soviet
and Cuban embassies are the names and addresses of owners of cars whose
licence plate numbers are photographed or copied at the observation posts. The
police make this information available without knowing the real reason. The
same data is also used to supplement reporting by the two surveillance teams.

Reporting. The Intelligence and Liaison Department of the Montevideo
Police Department is the government's (and the station's) principal source of
information on strikes and street demonstrations. This type of information has
been increasing in importance during the past few years as the PCU-dominated
labour unions have stepped up their campaigns of strikes and demonstrations in
protest against government economic policies. When strikes and demonstrations

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occur, information is telephoned to the station from I & E as the events progress.
It includes numbers of people involved, degree of violence, locations,
government orders for repression, and estimates of effectiveness, all of which is
processed for inclusion in station reporting to headquarters, the Southern and
Atlantic military commands, etc. At the end of each month I & E also prepares a
round-up report on strikes and civil disturbances of which the station receives a
copy.

While contact between the various officers in the police department and the
station is no secret to the Chief of Police — they are described as 'official' liaison
— the station also maintains a discreet contact with a former I & E chief who was
promoted out of the job and now is the fourth- or fifth-ranking officer in
Investigations. This officer, Inspector Antonio Piriz Castagnet, J is paid a salary
as the station penetration of the police department, and he is highly cooperative
in performing tasks unknown to his superiors. The station thus calls on this agent
for more sensitive tasks where station interest is not to be known by the police
chief or others. Piriz also provides valuable information on government plans
with respect to strikes and civil disorder, personnel movements within the police
and possible shifts in policy.

The overall cost of the AVALANCHE project, apart from AVENGEFUL
telephone tapping, is about 25,000 dollars per year.

SMOTH. The British Intelligence Service (MI-6), known in the CIA by the
cryptonym SMOTH, has long been active in the River Plate area in keeping with
British economic and political interests here. The station receives regularly
copies of SMOTH reports via headquarters but they are of very marginal quality.
Because of budget cutbacks the British are soon closing their one-man office in
Montevideo but before returning to England the SMOTH officer will introduce
Holman to the Buenos Aires Station Commander who will be in charge of MI-6
interests in Montevideo. Basically a courtesy arrangement between colleagues of
like mind, the SMOTH liaison is of little importance to the Montevideo
operational programme.

ODENVY. The FBI (cryptonym ODENVY) has an office in the Embassy in
Rio de Janeiro (Legal Attache cover) whose chief is in charge of looking after
FBI interests in Uruguay and Argentina. Occasionally the FBI chief comes to
Montevideo for visits to the police department and he usually makes a courtesy

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call on the Montevideo Chief of Station. Soon, however, the FBI will be opening
an office in the Embassy in Buenos Aires which will take over FBI interests in
Uruguay.

Covert Action (CA) Operations

AVCHIP. Apart from Ralph Harry the other non-official cover contract
officer is a young ex-Marine who is ostensibly the Montevideo representative for
several US export firms. The cover of this officer, Brooks Read, % has held up
well during the three or four years that he has been in Montevideo, mainly
because he has socialized mostly with the British crowd he met as a leader of the
English-speaking theatre group in Montevideo. Although he originally worked in
the station FI programme, during the past year he was transferred to the CA side
as cutout and intermediate case officer for media and student operations.
Although time-consuming, handling Read's affairs inside the station is a joy for
O'Grady, the inside officer in charge, by comparison with the plethora of
problems constantly caused by Harry.

AVBUZZ. Because of the large number of morning and afternoon
newspapers in Montevideo, press media operations are centralized in
AVBUZZ- 1, % who is responsible for placing propaganda in various dailies. As
each newspaper of the non-communist press is either owned by or responds to
one of the main political factions of the principal political parties, articles can be
placed more easily in some newspapers than in others depending upon content
and slant. AVBUZZ- 1 has access to all the liberal press but he uses most
frequently the two dailies of the Union Blanca Democratica faction of the Blanco
Party {El Pais and El Plata), the morning newspaper of the Colorado Party List
14 {El Did), and the morning newspaper of the Union Colorada y Batllista {La
Manana) to a lesser extent. AVBUZZ- 1 pays editors on newspapers on a space-
used basis and the articles are usually published as unsigned editorials of the
newspapers themselves. O'Grady is in charge of this operation which he works
through Brooks Read who deals directly with AVBUZZ- 1 . All told the station can
count on two or three articles per day. Clips are mailed to headquarters and to
other stations for replay.

AVBUZZ- 1 also writes occasional fly-sheets at station direction, usually, on
anti-communist themes, and he operates a small distribution team to get them on

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the streets after they are secretly printed in a friendly print shop. Television and
radio are also used by AVBUZZ- 1 , although much less than newspapers because
they carry less political comment.

AVBLOOM. Student operations have had very limited success in recent
years in spite of generous promotion of non-communist leaders for FEUU
offices. Recently the station recommended, and headquarters agreed, that student
operations be refocused to concentrate on the secondary level rather than at the
University — on the theory that anti-communist indoctrination at a lower level
may bring better results later when the students go on to the University. Brooks
Read works with several teams of anti-communist student leaders whom he
finances for work in organization and propaganda. O'Grady is also the station
officer in charge of student operations.

AVCHARM. Labour operations for some years have been designed to
strengthen the Uruguayan Labor Confederation J (CSU), which is affiliated with
the ORIT-ICFTU J structure, but we have been unsuccessful in reversing its
decline in recent years. A crucial decision on whether to continue support to the
CSU must soon be made. If the CSU is to be salvaged the station will have to
replace the present ineffectual leaders, not a pleasant prospect because of their
predictable resistance, and begin again practically from the beginning. The fact is
that the CSU is largely discredited, and organized labour is overwhelmingly
aligned either inside, or in cooperation with, the CTU and the extreme left. Apart
from the CSU, station labour operations are targeted at selected unions that can
be assisted and influenced, perhaps eventually controlled, through the
International Trade Secretariats that operate in Latin America, such as the
International Transport Workers Federation. J

The most important new activity in labour operations is the establishment last
November of the Montevideo office of the American Institute for Free Labor
Development. J This office is called the Uruguayan Institute of Trade Union
Education J and its director, Jack Goodwyn, J is a US citizen contract agent and
the Montevideo AIFLD representative. Alexander Zeffer, } the station officer in
charge of labour operations, meets Goodwyn under discreet conditions for
planning, reporting and other matters. In addition to training locally at the AIFLD
institute, Uruguayans are also sent to the ORIT school in Mexico and to the
AIFLD school in Washington.

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AVALON. This agent, A. Fernandez Chavez, J has for many years been used
for placing propaganda material and as a source of intelligence on political
matters. At times when AVBUZZ-1 cannot place things the station wants in the
papers, Fernandez may be successful because of his very wide range of friends in
political and press circles. He is the Montevideo correspondent of ANSA, the
Italian wire service, and of the Santiago station-controlled feature news service
Agenda Orbe Latinoamericano. % Although he occasionally meets Holman, his
usual station contact is Paul Burns, the CP officer.

AVID. Although the political-action operations formerly effected through
Benito Nardone have largely ended, Holman continues to see Nardone, Nardone's
wife Olga Clerici de Nardone, % who is very active in the Ruralist movement, and
Juan Jose Gari, % Nardone's chief political lieutenant. Gari has the major political
plum assigned to the Ruralists in the current Blanco government — he's President
of the State Mortage Bank. Should a policy change occur and the station return to
political and militant action, one place we would start is with Mrs Nardone and
Gari — even if Nardone himself fails to survive his struggle with cancer.

AVIATOR. Holman recently turned over to O'Grady the responsibility for
keeping up the developmental contact with Juan Carlos Quagliotti, % a very
wealthy right-wing lawyer and rancher. This man is the leader of a group of
similarly well-to- do Uruguayans concerned with the decline in governmental
effectiveness and in the gains made by the extreme left in recent years. He is
active in trying to persuade military leaders to intervene in political affairs, and
would clearly favour a strong military government, or military-dominated
government, over the current weak and divided executive. Although the station
does not finance or encourage him, an attempt .is made to monitor his activities
for collecting intelligence on tendencies in military circles to seek
unconventional solutions to Uruguayan difficulties. Should the need arise for
station operations designed to promote military intervention, Quagliotti would be
an obvious person through whom to operate.

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SUPPORT AGENTS

As in other stations we have a fairly large number of support agents who own
and rent vehicles or property for use in station operations. These agents, mainly
social acquaintances of station officers, are usually given whisky or other
expensive and hard-to-get items that can be brought in with diplomatic free-entry,
rather than salaries. Tito Banks, J a wool dealer of British extraction, is one of
the more effective of these agents.

As in Ecuador, the station in Montevideo is getting no small mileage from a
relatively small number of officers. The station budget is a little over one million
dollars per year. Major improvement is needed in the access agent programme
against the Soviets, direct recruitment against the Cubans, higher-level
penetrations of the PCU, improvement in the capabilities of police intelligence,
and greater effectiveness in labour and student operations.

Next week I begin to take over all the operations targeted against the Cubans,
not all of which are being handled at present by the officer I am replacing,
Michael Berger. This officer has had difficulty in learning Spanish and on the
whole has been able to work only with English-speaking agents. He's being
married to an Uruguayan girl next week-end and afterwards will depart for a
honeymoon, home leave and reassignment to the Dominican Republic.

The operations I'm taking over are the following: the AVCASK operations
against the Paraguayans; the AVIDITY letter intercept; Ralph Hatry and his
problems (unfortunately); the telephone-tap transcriber AVENGEFUL-9;
AVANDANA; the chauffeur at the Cuban Embassy; the observation post at the
Cuban Embassy; the AVENIN surveillance team; the AVBASK penetration of the
MRO; the Foreign Ministry protocol official who provides photographs and other
data on communist diplomats; and the postman who delivers letters to the
ZRKNICK Cuban intelligence support agent. I'm also temporarily (I hope) taking
over Holman's contacts with Inspector Antonio Piriz, J our main penetration of
the Montevideo Police Department, and with Commissioner Alejandro Otero, J
the Chief of the Intelligence and Liaison Department.

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Montevideo 26 March 1964

The ruling Blanco Party is in a deepening crisis right now that illustrates both
the complexity and the fragmentation of Uruguayan politics — and the effect these
conditions have on our operations.

In January the Chief of Police of Canelones, the interior department that
borders on Montevideo, was involved in a bizarre bank robbery in which the two
robbers were gunned down by police just as they were leaving the bank. Press
reporting revealed that there was a third member of the gang who had been
working for the Canelones Police Chief and had previously advised which bank
was to be robbed, the day and time of the robbery and the hideouts to be used by
the robbers afterwards. The Police Chief provided weapons for the robbers that
had been altered so that they would not fire. In the fusillade of bullets fired by the
police ambush, a policeman and a passer-by were wounded, but the Police Chief
defended such exaggerated firepower, on the grounds that the robbers had first
fired several shots at the police. The most ironic note for the murdered robbers
was that the Montevideo press had carried several articles during the week before
the robbery that unusual police movements in Canelones at that time were due to
a tip-off on a probable robbery. Had the robbers read the newspapers they would
have known they were betrayed.

An uproar followed this irregular police procedure, producing an
investigation in the Ministry of the Interior and a movement to fire the Police
Chief and prosecute him for not having prevented the robbery. Lines are now
drawn in the Blanco Party between those supporting the Police Chief, who comes
from one Blanco faction, and those supporting Felipe Gil, } the Minister of the
Interior, who comes from another Blanco faction and who is leading the
movement against the Police Chief. Supporters of the Chief, in fact, are charging
that the Chief had kept the Minister fully informed on the case and that the
Minister is to blame for any unethical procedures.

Benito Nardone } died yesterday but almost until the end he was making
radio broadcasts in support of the Canelones Police Chief. According to reports
from Juan Jose Gari J there is no quick solution in sight, and so the Blancos
continue to weaken — a process that reaches right up to the Blanco NCG majority.
The Colorados aren't sitting idly by. The day after I arrived they got a Colorado
elected President of the Chamber of Deputies by taking advantage of Blanco
splits. Meanwhile Holman's chief project with the Minister, establishment of an

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AID Public Safety Mission in the police, continues in abeyance pending a
decision by Gil.

Montevideo 1 April 1964

It's all over for Goulart in Brazil much faster and easier than most expected.
He gave the military and the opposition political leaders the final pretext they
needed: a speech to the Army Sergeants' Association implying that he backed the
non-commissioned officers against the officer corps. Coming right after acts of
insubordination by low-ranking sailors and marines, the speech couldn't have
been better timed for our purposes. The Rio station advised that Goulart is
probably coming to Uruguay which means Holman's fears about new exile
problems were real. US recognition of the new military government is practically
immediate, not very discreet but indicative, I suppose, of the euphoria in
Washington now that two and a half years of operations to prevent Brazil's slide
to the left under Goulart have suddenly bloomed.

Our campaign against him took much the same line as the ones against
communist infiltration in the Velasco and Arosemena governments two and three
years ago in Ecuador. According to Holman the Rio station and its larger bases
were financing the mass urban demonstrations against the Goulart government,
proving the old themes of God, country, family and liberty to be effective as ever.
Goulart's fall is without doubt largely due to the careful planning and consistent
propaganda campaigns dating at least back to the 1962 election operation.
Holman's worry is a new flood of exiles to add to the Paraguayans and
Argentines we already have to cover.

Montevideo 3 April 1964

My first Cuban recruitment looks successful. A trade mission arrived from
Brazil and will be here until sometime next week. An agent of the Rio station had
reported that Raul Alonzo Olive, a member of the mission and perhaps the most
important because he's a high-level official in the sugar industry, seemed to be
disaffected with the revolution. In order to protect the Rio agent against
provocation and because of the confusion in Brazil this past week, the Rio station
suggested that a recruitment approach be made here or in Madrid which is their
last stop before return to Havana.

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The AVENIN surveillance team followed him after arrival and at the first
chance when he was alone they delivered a note from me asking for a meeting.
The note was worded so that he would know it came from the CIA. After reading
it he followed the instructions to walk along a certain street where I picked him
up and took him to a safe place to talk. Headquarters had sent a list of questions
for him, mostly dealing with this year's sugar harvest, efforts to mechanize cane
cutting, and anyone else he might know was dissatisfied. We spoke for about two
hours because he had to rejoin his delegation, but we'll meet again several times
before he leaves for Madrid. Contact instructions just arrived from the Madrid
station.

He said sugar production from this year's harvest should be about five
million tons and he rambled on at length about the problems with the cane-
cutting machines, mostly caused when used on sloping or inclined surfaces. What
was surprising was that he knows so many government leaders well even though
he wasn't particularly active in the struggle against Batista.

I recorded the meeting, which he didn't particularly like, and reported by
cable the essentials of what he said. He thinks he will be in Madrid for most of
next week, or perhaps longer, so communications training can be done there.
Strange he agreed so readily to return to Cuba and for his salary to be kept safe
for him by the CIA, but he seemed honest enough. In Madrid he'll get the
polygraph, which should help to resolve his bona fides.

Montevideo 5 April 1964

Goulart arrived here yesterday and was greeted with a surprising amount of
enthusiasm. The military takeover, in fact, has been rather badly received here in
Uruguay because Goulart was popularly elected and a strong Brazilian military
government may mean difficulties for Uruguay over exiles. Already officials of
Goulart's government are beginning to arrive, and the Rio station is sending one
cable after another asking that we speed up reporting arrivals. Our only source
for this information is Commissioner Otero, % whose Intelligence and Liaison
Department is in charge of processing the exiles. It's clear that the Rio station is
going an out to support the military government, and the key to snuffing out any
counter-coup or insurgency is in either capturing or forcing into exile Leonel
Brizola, Goulart's far-left brother-in-law who is the Federal Deputy for
Guanabara (Rio de Janeiro) and is now in hiding.

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Headquarters has begun to generate hemisphere-wide propaganda in support
of the new Brazilian government and to discredit Goulart. For example, Arturo
Jauregui, J Secretary-General of ORIT, has sent a telegram pledging ORIT J
support for the new Brazilian government. This may provoke a negative reaction
in places like Venezuela because the CIA's policy before was to have ORIT
oppose military takeovers of freely elected governments — not very realistic in
view of the way events are moving.

Through AVBUZZ we're currently promoting opinion favourable to the
Venezuelan case against Cuba in the OAS based on the arms cache discovered
last year. One of our placements was a half-page paid advertisement in the
Colorado daily La Manana that came out yesterday. It was ostensibly written and
signed by Hada Rosete, } the representative here of the Cuban Revolutionary
Council } and one of the propaganda agents of the AVBUZZ project. In fact it
was written by O'Grady and Brooks Read and based on information from
headquarters and from station files. The statement relates the arms cache to
overall Soviet and Cuban penetration of the hemisphere, including allegations
attributed to Rolando Santana, } last year's Cuban defector here. Current
insurgent movements in Venezuela, Honduras, Peru, Colombia, Argentina,
Panama and Bolivia are described as being directed from Soviet and Cuban
embassies in Mexico City, Buenos Aires and Montevideo, not to exclude the
Chinese communists who were also mentioned.

Montevideo 18 April 1964

Holman returned from a Chiefs of Station conference with the grudging
acknowledgement that we'll have to devote more attention to the Brazilian exiles.
The decision was made, apparently by President Johnson himself, that an all-out
effort must be made not only to prevent a counter-coi/p and insurgency in the
short run in Brazil, but also to build up their security forces as fast and as
effectively as possible for the long run. Never again can Brazil be permitted to
slide off to the left where the communists and others become a threat to take
things over or at least become a strong influence on them.

Here in Montevideo this policy means that we will have to assist the Rio
station by increasing collection of information about the exiles. This will have to
be through police intelligence for the time being and will be my responsibility
since Holman, as I suspected, wants me to continue to work with Otero, Piriz, de

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Anda, Torres and others while he maintains the high-level contacts with the
Minister of the Interior, Felipe Gil, and the Chief of Police, Colonel Ventura
Rodriguez. f As a start I have gotten Otero to place his officers at the residences
of Goulart and three or four of the most important exiles, according to the Rio
station's criteria, and these officers will keep logs of visitors while posing as
personal security officers for the exiles. We'll forward highlights of the reports to
Rio by cable along with information on new arrivals with full copies following
by pouch.

The political currents here are running against the new military government
in Brazil and making favourable editorial comment very difficult to generate. The
Brazilian government, nevertheless, has begun to pressure the Uruguayans in
different ways so that Goulart and his supporters in exile here will be forbidden
to engage in political activities.

Promoting sentiment in favour of a break in relations with Cuba is almost as
difficult here as promoting favourable comment towards Brazil. Not that
Uruguayans are fond of communism or well-disposed towards the Cuban
revolution. The corner stone of Uruguayan foreign policy is strict non-
intervention because of the country's vulnerability to pressures from its two giant
neighbours. Since sanctions or collective action against Cuba can easily be
interpreted as intervention in Cuba's internal affairs, the station programme to
promote a break in relations runs counter to Uruguayan traditional policies.

Even so, we are keeping up media coverage of Cuban themes in the hope that
Venezuelan attempts to convoke an OAS Foreign Ministers conference over the
arms cache will result not only in the conference but in a resolution for all OAS
countries to break with Cuba. A few days ago the former Venezuelan Foreign
Minister under Betancourt, Marcos Falcon Briseno, was here trying to drum up
support for the conference but he couldn't convince the Uruguayans to join
actively in the campaign.

Montevideo 24 April 1964

We've just had a visit from the new WH Division Chief, Desmond
FitzGerald, J who is making the rounds of field stations. Holman gave a buffet
for all the station personnel and wives, and in the office each of us had a short
session with FitzGerald to describe our operations. He was pleased with the
Cuban recruitment but suspects he may have been a provocation because of his

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high estimate of the sugar harvest. Instead of five million tons, according to
FitzGerald, production this year will probably be less than four million. He also
encouraged me to concentrate on making an acceptable recruitment approach to
the Cuban code clerk here. When we told him that one of our station offices has a
common wall with an uncontrolled apartment in the building next door, he
ordered that a large sign be immediately placed on the wall reading: 'This Room
is Bugged!' Rank has its privileges in the CIA too.

FitzGerald was very insistent that the Montevideo station devote attention to
supporting the new Brazilian military government through intelligence collection
and propaganda operations. Holman has given O'Grady the overall responsibility
for Brazilian problems, and the Rio station is going to help by sending down one
of its liaison contacts as military attache in the Brazilian Embassy. He is Colonel
Camara Sena, J and he is due to arrive any day. O'Grady will be meeting with
him and will assist him in developing operations to penetrate the exile
community.

In spite of Goulart's popularity here, the NCG voted yesterday to recognize
the Brazilian government which should serve to ease tensions. Also, Goulart has
been declared a political asylee rather than a refugee which is a looser status that
would have allowed him more freedom for political activities.

Montevideo 2 May 1964

Headquarters has approved my plan for recruitment of Roberto Hernandez,
the Cuban code clerk, and we shall see if luck prevails. I'm using Ezequiel
Ramirez, J the training officer from headquarters who's just finished training the
AVBANDY surveillance team, to make the initial contact. He can pass for a
Spaniard or Latin American and will be less dangerous for Hernandez (if he
accepts) until we can establish a clandestine meeting arrangement. Today
Ramirez begins working with the AVENIN surveillance team to follow
Hernandez from the Embassy to wherever in town the first approach can be
made.

It's very hard to tell what the chances are, although reporting from Warner,
{the Cuban Embassy chauffeur, has been excellent in providing insight into
Hernandez's personality. He not only is having problems with his wife, who has
just had a baby, but he seems to be more than casually involved with Mirta, his
Uruguayan girlfriend. Because of Mirta I rejected the girl offered by the Miami

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station and will concentrate on interesting Hernandez in eventual resettlement,
possibly in Buenos Aires. In addition to his duties as code clerk he is the
Embassy technical officer with proficiency in photography Perhaps resettlement
could include setting him up with a commercial photography shop. For the
moment, however, we will offer him, per headquarters instructions, thirty
thousand dollars for a straight debriefing on what he knows of Cuban intelligence
operations; fifty thousand dollars for the debriefing and provision and
replacement of the code pads; and three thousand dollars for each month he will
work for us while continuing to work in the Embassy. I have a safe apartment all
ready to use if Hernandez agrees and will take over from Ramirez as quickly as
possible.

The other day I cornered Holman and proposed that I could do more with the
police work and Cuban operations if I weren't bogged down with the
Paraguayans, the letter intercept and Ralph Hatry. It was a dirty move because I
suggested that Alex Zeffer, J the labour officer, could probably take over these
operations. Holman agreed and then told Zeffer who hasn't spoken to me since.
He knows all about Harry's problems and of the drudgery involved in the letter
intercept.

I'll continue to go occasionally at night to AVANDANA's J house in order to
discuss problems of the Cuban Embassy observation post with his wife. I
wouldn't want to miss that experience — the house is a low bungalow set far back
off the street in a sparsely populated section on the edge of town and surrounded
by thick woods, almost jungle. The house is protected by a high chain-link fence
and perhaps a half-dozen fiercely barking dogs. Such isolation in this
addamsesque setting is convenient in that AVANDANA is almost completely
deaf and operational discussions are necessarily but insecurely loud when not
screaming. Each time I have visited the home I have gone with Hatry, and the
picture of these two ageing men yelling furtively over their spy work is an
interesting study in contradiction.

Another operation that I took over has resolved itself. Anibal Mercader, % the
MRO penetration, decided to seek employment in the US. He was hired by a
Miami bank and is leaving shortly — I arranged to keep his MRO membership off
the station memorandum on his visa application.

I don't envy Alex Zeffer for his labour operations. He is going to have to start
again, practically from scratch, because the decision was finally made to
withdraw support from the Uruguayan Labor Confederation % (CSU). Last month

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the CSU held a congress and the leadership was unable to overcome the
personality conflicts that have resulted in continuing withdrawals of member
unions and refusals of others to pay dues. The real problem is leadership and
when Andrew McClellan, J the AFL-CIO Inter-American Representative, and
Bill Doherty, J the AIFLD social projects chief arrived last week they advised
CSU leaders that subsidies channelled through the ICFTU, ORIT and the ITS are
to be discontinued.

The situation is rather awkward because the CSU has just formed a workers'
housing cooperative and expected to receive AIFLD funds for construction.
These funds will also be withheld from the Cs u and may be channelled through
another noncommunist union organization. Next week Serafmo Romualdi, }
AIFLD Executive Director, will be here for more conversations on how to
promote the AIFLD programme while letting the CSU die. One thing is certain: it
will take several years before a new crop of labour leaders can be trained through
the AIFLD programme and, from them recruitments made of new agents who can
set up another national confederation to affiliate with ORIT and the ICFTU.

Montevideo 5 May 1964

None of us can quite believe what is happening. Just as planned, Ramirez,
and the surveillance team followed Hernandez downtown, and at the right
moment he walked up to Hernandez in the street and told him the US government
is interested in helping him. Hernandez agreed to talk but only had about fifteen
minutes before he had to get back to the Embassy. He was a pale bundle of
nerves but he agreed in principle to the debriefing and to providing the pads.
Another meeting is set for tomorrow afternoon.

I sent a cable advising headquarters of the meeting and suggesting that they
send down the Division D technician right away so that he can work on the pads
on a moment's notice. If this recruitment works, as it seems to be working, we'll
have the first important penetration of Cuban operations in this region.

More anti-Cuban propaganda. Representatives of the Revolutionary Student
Directorate in Exile J (DRE), an organization financed and controlled by the
Miami station, arrived today. They're on a tour of South America hammering
away at the Cuban economic disaster. We don't have a permanent representative
of the DRE in Montevideo so arrangements were made by Hada Rosete } and
AVBUZZ- 1 . Also through AVBUZZ- 1 we're generating propaganda on the trial

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in Cuba of Marcos Rodriguez, a leader of the Revolutionary Student Directorate
in the struggle against Batista. Rodriguez is accused of having betrayed 26 of
July members to the Batista police, and our false line is that he was really a
communist and was instructed to betray to 26 of July people by the Cuban
Communist Party. Purpose: exacerbate differences between the old-line
communists and the 26 of July people. We're also playing up the Anibal
Escalante purge. Both cases are causing serious divisions in Cuba where,
according to AVBUZZ-1, 'the repression is comparable to that under Hitler,
Mussolini and Stalin as the revolution devours its own'.

The internal crisis in the Blanco Party over the Canelones police case
continues to grow. What is at stake, besides the reputations of the principals, is
the division of spoils among the Blanco factions — a very delicate balance
negotiated with difficulty and easily upset by internal struggle. Rumours abound
of an impending Cabinet crisis.

Montevideo 10 May 1964

All is not well on the Hernandez recruitment. He made the second meeting
with Ramirez, but refused to talk about Cuban operations until he actually saw
the money. He doesn't trust us an inch. Zeke set up a third meeting and I went
with fifteen thousand dollars — practically all the cash we have right now in the
station. Holman was nervous about me taking out all that money, but if we're
going to get Hernandez to talk we have to at least show him the money and
maybe even give him a little. O'Grady also came along for extra security, but
Hernandez didn't show.

My plan was to give Hernandez up to one thousand dollars if he would begin
talking and then try to convince him to let me keep everything for him in an
Agency account until we finally arrange for him to 'disappear'. Otherwise he
might be discovered with large sums of money he can't explain. For four nights
now I've been waiting for him and if he doesn't show up tonight I'll get Zeke back
into action with the surveillance team.

Yesterday the Division D technician arrived. He says he only needs the code
pads for a few hours in order to open, photograph and reseal them. That's going
to be a neat trick: the pads have adhesive sealers on all four edges so it's only
possible to see the top page. But if we get them copied we'll be able to read all
their traffic for as long as the pads last.

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For me the most important thing is the debriefing on their intelligence
operations. Hernandez told Zeke that he knows absolutely everything they're
doing here and I believe him. Tonight he's got to show.

Leonel Brizola, leader of the far-left in the Goulart government and Goulart's
brother-in-law, arrived here in exile and the Brazilian government has asked that
both he and Goulart be interned. If interned they will have to live in an interior
city without freedom of movement around the country which would make control
much easier. As the most dangerous political leader in the old government,
Brizola's leaving Brazil is a favourable development. He had been in hiding since
the fall of Goulart. The Rio station wants close coverage of him.

Montevideo 15 May 1964

Something is definitely going wrong on the Hernandez recruitment. From the
observation post at the Cuban Embassy I know Hernandez practically hasn't left
the Embassy since the second meeting with Zeke Ramirez. For four days the
surveillance team and Zeke have been waiting for the signal from the OP in order
to intercept Hernandez again for another try. According to the telephone tap on
the Embassy Hernandez isn't taking many calls either, and the chauffeur reported
today that Hernandez hasn't spoken to him lately. I can't give him special
instructions because I don't want him to suspect we have a recruitment going on.
Nothing to do but just be patient and keep on trying.

Another nuisance assignment. The Santiago station has a really big operation
going to keep Salvador Allende from being elected President. He was almost
elected at the last elections in 1958, and this time nobody's taking any chances.
The trouble is that the Office of Finance in headquarters couldn't get enough
Chilean escudos from the New York banks so they had to set up regional
purchasing offices in Lima and Rio. But even these offices can't satisfy the
requirements so we have been asked to help.

The purchasing agent for currency in this area is the First National City
Bank, J but the Buenos Aires station usually handles currency matters because
they have a 'Class A' finance office empowered to purchase currency. As a 'Class
B' station we are restricted to emergencies for exchanging dollars for local
currency. Nevertheless, headquarters sent down a cheque drawn on an account in
the New York City Bank office which I took over to Jack Hennessy, J who is the
senior US citizen officer at the Montevideo Citibank. He is cleared by

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headquarters for currency purchases and had already been informed by Citibank
in New York to expect the cheque. I gave him the cheque and he sent his buyers
over to Santiago for discreet purchase. In a couple of days they were back —
according to Hennessy they usually bring the money back in suitcases paying
bribes to customs officials not to inspect — and Paul Burns and I went down to
see Hennessy for the pick-up. When we got back to the station we had to spend
the rest of the day counting it — over one hundred thousand dollars' worth. Now
we'll send it to the Santiago station in the diplomatic pouch. They must be
spending millions if they have to resort to this system and New York, Lima and
Rio de Janeiro together can't meet the demand.

Montevideo 20 May 1964

The Hernandez recruitment has failed — for the time being anyway. Today he
finally left the Embassy and with the surveillance team Zeke Ramirez caught him
downtown. Hernandez refused to speak to Ramirez or even to acknowledge him.
The key to the operation now is whether Hernandez told anyone in the Embassy
of his first conversations with Ramirez and all the signs are negative. Today, in
fact, Hernandez turned pale when Zeke approached him. If he had reported the
recruitment he wouldn't be so panicky because his position in the Embassy would
be firm. Undoubtedly his fright derives from failure to report the first
conversations with Zeke — meaning that his initial acceptance was genuine.
Ramirez will return to Washington tomorrow and we'll let Hernandez get back
into his old habits before approaching him again. According to his first
conversations with Ramirez, Hernandez's political and cultural orientation is
towards Argentina or Brazil rather than the US. Perhaps we will enlist help from
the Buenos Aires or Rio stations with a security service penetration agent who
could make the next approach in the name of the Brazilian or Argentine
government.

Montevideo 23 May 1964

Hernandez has panicked but we'll probably get him after all. This morning I
had an emergency call from the Cuban Embassy chauffeur and when we met he
reported that when he arrived this morning at the Embassy everything was in an
uproar. Hernandez left the Embassy — he lives there with his family — sometime

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during last night leaving behind his wedding-ring and a note for his wife. The
Cubans believed he has defected and that he's with us, either in hiding here or on
his way to the US. From the worry and gloom at the Embassy the chances are
that he took the code pads with him.

I told the chauffeur to stick around the Embassy all day, if possible — he
doesn't usually work on Saturday afternoons — and to offer to work tomorrow.
Then I got the Cuban Embassy observation post going — we usually close down
on week-ends — and with Holman, O'Grady and Burns we tried to decide what to
do. What we can't figure out is where Hernandez is and why he hasn't come to
the Embassy. We arranged for the front door to be left open so that Hernandez
can walk right in instead of waiting after ringing the bell, and tonight (in case he's
waiting for darkness) we'll have a station officer sitting in the light just inside the
front door. Somehow we have to give Hernandez the confidence to walk on in.
Sooner or later he's got to appear.

Montevideo 24 May 1964

Hernandez is out of his mind. The chauffeur called for another emergency
meeting and reported that Hernandez arrived back at the Embassy sometime after
daybreak. He's being kept upstairs under custody. Several times yesterday and
today the Charge went over to the Soviet Embassy, probably because the Soviets
are having to handle the Cuban's encoded communications with Havana about
Hernandez. What possibly could have possessed Hernandez to change his mind
again?

Montevideo 26 May 1964

According to the chauffeur, Hernandez is going to be taken back to Cuba
under special custody — Ricardo Gutierrez and Eduardo Hernandez, both
intelligence officers, will be the escorts. They leave Friday on a Swissair flight to
Geneva where they transfer to a flight to Prague.

The chauffeur also learned from Hernandez that when he disappeared from
the Embassy last Saturday he went to see his friend Ruben Pazos and they drove
together to the Brazilian border. Hernandez had the code pads with him and
planned to defect to the Brazilian Consul in Rivera, but the Consul was out of
town for the week-end. After waiting a while Hernandez changed his mind again

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and decided to take his chances with revolutionary justice — he told
AVBARON-1, the chauffeur, that he'll probably have to do about five years on a
correctional farm. I wonder.

We've decided to make the case public for propaganda purposes and also to
try to spring Hernandez loose on the trip home. The decision to publish came
after the Minister of the Interior, Felipe Gil, refused to get the Foreign Ministry
or the NCG involved — Holman told him that Hernandez had been caught trying
to defect to us and asked for official efforts to save him. The most the Minister
would agree to was a police interview at the airport, in which Hernandez will be
separated, by force, if necessary, from his escorts. Through AVBUZZ-1,
meanwhile, we'll expose the case as a sensational kidnapping within the Cuban
Embassy of a defector trying to flee from communist tyranny.

Montevideo 28 May 1964

The story of Hernandez's kidnapping is splashed all over the newspapers and
is provoking just the reaction we wanted. AVBUZZ-1 sent several reporters to the
Embassy seeking an interview with Hernandez and they were turned away,
adding to speculation that perhaps only Hernandez's corpse will eventually
appear.

I've alerted each of the stations where Hernandez's flight will stop on the way
to Geneva. So far the stations in Rio de Janeiro, Madrid and Berne are going to
take action. Rio and Madrid will arrange for police liaison services to speak with
Hernandez and the Geneva base will arrange for uniformed Swiss police to be in
evidence while Hernandez is in transit, although forcing an interview is too
sensitive for the Swiss.

We hope Hernandez won't get that far. Through the Chief of Police, Colonel
Ventura Rodriguez, we have the interview arranged at the airport tomorrow
before the flight leaves. Inspector Antonio Piriz J and Commissioner Alejandro
Otero J will both be there, and Hernandez will be separated for a private
interview in which our police agents will try to convince him to stay rather than
face punishment on return. I'll also be at the airport to speak with him if he shows
signs of agreeing to political asylum in Uruguay.

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Montevideo 29 May 1964

More propaganda but Hernandez couldn't be convinced. At the airport,
Gutierrez, one of the escorts, tried to resist having Hernandez separated for the
police interview. During the scuffle he pulled out a pistol and was forcibly
disarmed. Hernandez, however, insisted that he was returning of his own will and
eventually he and his wife and child boarded the flight with the two escorts. So
far no news from stations along the way.

This morning before his departure the Cubans recovered somewhat from the
adverse propaganda by inviting the press to the Embassy for an interview with
Hernandez. Hernandez said he was returning to Cuba because he feared reprisals
against his wife and son from certain persons (unidentified) who were trying to
get him to betray his country. For the past twenty days, he admitted, certain
persons whose nationality he couldn't place were accosting him in the street.
They had first offered him five thousand dollars and later as high as fifty
thousand. Even with this interview, however, press coverage makes it clear that
Hernandez is being returned as a security risk, especially in view of the escorts.

The recruitment may have failed but we have certainly damaged the Cubans'
operational capabilities here. The only officers they have left now are the
Commercial Counsellor and his wife, and the Charge who we don't believe is
engaged in intelligence work. Suddenly they're cut from five to two officers and
must use Soviet Embassy communications facilities until they can get a new code
clerk. The propaganda, moreover, may have improved the climate here for a
break in relations if the Venezuelan case in the OAS prospers. If we didn't get the
pads and debriefing, at least we got good media play and disruption.

Perhaps indirectly related to the Hernandez case — we won't know for some
time — are two very favourable recent developments relating to Cuban
intelligence defections. In Canada, a Cuban intelligence officer, Vladimir
Rodriguez, J defected a few weeks ago and is beginning to give the first details
of the General Intelligence Directorate (DGI) which is housed within the
Ministry of the Interior. Headquarters is keeping us up to date on the highlights
of debriefmgs, which must be similar to the first KGB defector because nothing
was known until now — not even the existence of the DGI.

More closely related to Cuban operations in Uruguay is another attempt to
defect by Earle Perez Freeman, J their former intelligence chief in Montevideo,

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who had defected and then changed his mind in Mexico this past January. Perez
has just obtained asylum in the Uruguayan Embassy in Havana where three of
the four diplomats (the AMHALF agents) are working for the Miami station. One
of these, the Charge d'Affaires, is being replaced, but through the other two,
German Roosent and Hamlet Goncalves, } the Miami station will try for a
debriefing on Cuban operations in Montevideo. Over the week-end I'll compile a
list of questions based on what we already know and forward it to Miami for use
with the AMHALF agents.

Montevideo 6 June 1964

The struggle within the Blanco Party has reached a new crisis just as labour
unrest also approaches a peak. Beginning on 21 May the Cabinet ministers began
to resign, one by one, with the Minister of Defense resigning on 30 May and
Felipe Gil, the Minister of the Interior, today. From initial concern over the
Canelones police case, the Blancos have turned to fighting over assignment of
government jobs, and rumours are getting stronger by the day that Blanco
military officers are organizing a coup against the Blanco political leadership. So
far the rumours are unfounded but we're sending regular negative reports to
headquarters based mostly on reports from Gari and Colonel Ventura Rodriguez
who are closely connected with the military officers said to be involved in the
planning. Holman is hoping to get a new Minister of the Interior who will be
strong enough to push through the Public Safety Mission for the police.

As the government grinds to a halt the unions of the autonomous agencies
and decentralized services are getting more militant. Two days ago they struck
for twenty- four hours for a 45 per cent increase in the budget for the government
enterprises, and a twenty-four-hour general strike is already being organized by
these unions and the CTU in protest against inflation.

Hernandez returned to Cuba although police agents of the Rio station had
another scuffle with Gutierrez when they separated him for an interview alone
with Hernandez. Cuban sugar production for this year's harvest was announced
(much lower than my Cuban sugar official, Alonzo, J told me) so FitzGerald was
probably right. Now I'll have to terminate the safe apartment I used with him. No
indication from Madrid yet on results of the polygraph. Miami station reported
that getting information' from Perez in Havana may be more complicated than
expected because they want to keep Goncalves and Roosen from working

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together on the case. For the time being they'll use only Roosen, and he only
comes out to Miami or Nassau about once a month.

Montevideo 17 June 1964

The Blancos finally solved their crisis. New ministers were announced and
other jobs were realigned among the different disputing factions. The new
Minister of the Interior is Adolfo Tejera J whom the Montevideo Police Chief,
Rodriguez, describes favourably. Through the Chief, Holman will make an early
contact with the new Minister using the AVENGEFUL telephone-tapping
operation as the excuse and following with the AID Public Safety programme
later.

Today practically all economic activity is stopped thanks to a twenty-four-
hour general strike, organized by the CTU and the unions of the government
autonomous agencies and decentralized services, on account of inflation and
other economic ills that adversely affect the workers. Last night, as the strike was
about to start, Colonel Rodriguez, J Montevideo Police Chief and the
government's top security official, issued a statement denouncing the wave of
rumours of a military takeover as completely unfounded.

How different from Ecuador where a general strike is enough to bring down
the government. Here traffic circulates freely and almost everyone, it seems, goes
to the beach even if it's too cold to swim. Holman, in commenting on the Sunday-
like atmosphere, said that Uruguayans are nothing more than water-watchers —
content to sip their mate quietly and watch the waves roll in.

The Brazilian government is keeping up the pressure for action against
political activities by Goulart, Brizola and other exiles. Although they have
begun to allow some of the asylees in the Uruguayan Embassy to come out,
which has temporarily relieved tension, they have also sent a Deputy here for a
press conference to try to stimulate action for control of the exiles. But the
Deputy's remarks were counter-productive because in addition to accusing
supporters of Goulart and Brizola of conspiring against the military government
through student, labour and governmental organizations in Brazil, he also said
that Uruguay is infiltrated by communists and as such is a danger for the rest of
the continent. The Uruguayan Foreign Minister answered later by acknowledging
that the Communist Party is legal in Uruguay, but he added that the country is
hardly dominated by them.

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Brazilian pressures may create negative reactions in the short run but sooner
or later the Uruguayans will have to take a similar hard line on communism
because the country's just too small to resist Brazil's pressure. As an answer, I
suppose, to Holman's resistance on covering the exiles, the Rio station has
decided to send two more of its agents to the Brazilian Embassy here — in
addition to the military attache, Colonel Camara Sena. } One is a high-level
penetration of the Brazilian Foreign Ministry, Manuel Pio Correa, J who is
coming as Ambassador, and the other is Lyle Fontoura, J a protege of Pio, who
will be a new First Secretary. Until last month Pio was Brazil's Ambassador to
Mexico where, according to the background forwarded by the Rio station, he was
very effective in operational tasks for the Mexico City station. However, because
Mexico hadn't recognized the new military government, Pio was recalled, and the
Rio station arranged to have him reassigned to Montevideo which at the moment
is the Brazilian government's diplomatic hot spot. When they arrive Holman will
handle the contact with Pio while O'Grady works with Fontoura. One way or
another the Rio station is determined to generate operations against the exiles,
and Pio apparently is the persistent type who will keep up pressure on the
Uruguayan government.

Montevideo 28 June 1964

The Miami station is having trouble getting information out of Earle Perez
Freeman, the Cuban intelligence officer who is in asylum in the Uruguayan
Embassy in Havana. After several attempts at elicitation by German Roosen, one
of the Uruguayan diplomats working for the Miami station, Perez accused him of
working for the CIA and demanded that the CIA arrange to get him out of Cuba.
He told Roosen that he will not reveal anything of Cuban operations in Uruguay
until he is safely out of Cuba.

One of Roosen's problems is that he is unable to pressure Perez very
effectively without instructions from the Foreign Ministry here. He denied, of
course, Perez's accusation of his connections with us, but is reluctant to proceed
without some instructions from his government. Holman agreed that I propose to
Inspector Piriz that he go to Miami to provide official guidance to Roosen — but
without Roosen knowing that Piriz is in contact with us. When I spoke to Piriz he
liked the idea but cautioned that Colonel Rodriguez, the Chief of Police, should
authorize his trip and coordinate with the Foreign Ministry.

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Holman proposed to Rodriguez that he send one of his best officers to Miami
to work with Uruguayan diplomats who are in contact with Perez in the Embassy,
but without revealing either our contacts with Piriz or Roosen. As expected
Rodriguez accepted the idea, obtained Foreign Ministry endorsement, and
nominated Piriz. In a few days now, Piriz will go to Miami to give official
guidance both to Roosen and to Goncalves, the other Uruguayan diplomat in
Havana working for the Miami station (Ayala Cabeda had previously been
transferred from Havana and was no longer used by the Agency). The Miami
officer in charge will be meeting Roosen, Goncalves and Piriz separately, all of
which seems cumbersome and inefficient, but we must protect the contact we
have with each from being known by the others. In any case Roosen and
Goncalves will have official encouragement for pressure against the Cuban
intelligence officer. We've got to get information from him before any break in
relations removes the diplomat-agents from Havana.

The campaign for isolating Cuba is another step closer to success. The OAS
announced that sufficient votes have been obtained for a Conference of Foreign
Ministers to consider the arms cache case and the Venezuelan motion that all
OAS members still having relations with Cuba break them. Still no sign,
however, that Uruguay will support the motion or break even if the motion is
passed.

Propaganda against Cuba continues through the AVBUZZ media project.
Among the many current placements are those of the canned propaganda
operation, Editors Press Service, J which is based in New York and turns out
quantities of articles against the Castro government and communism in general,
much of which is written by Cuban exiles like Guillermo Martinez Marquez. J

Montevideo 15 July 1964

The coup rumours have subsided since the general strike last month but
several strikes have continued. Headquarters sent down a strange dispatch that
Holman believes is a prelude to getting back into political-action operations.
According to him the dispatch, although signed as usual by the Division Chief,
was actually written by Ray Herbert } who is Deputy Division Chief and an old
colleague of Holman's from their days in the FBI. In rather ambiguous terms this
dispatch instructs us to expand our contacts in the political field to obtain
intelligence about political stability, government policy concerning activities of

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the extreme left, and possible solutions to current problems such as constitutional
reform. Holman believes that Herbert deliberately did not mentioned political-
action operations (as opposed to political-intelligence collection) but that the
message to prepare for renewal of these operations was clearly implied.

For preliminary organization Holman has given me the responsibility for
reporting progress and for developing new political contacts. He will increase
somewhat his meetings with Mrs. Nardone and with Gari and soon will introduce
me to yet another Ruralista leader, Wilson Elso, } who is a Federal Deputy. We
will not make contact with the other principal Ruralista leader, Senator Juan
Maria Bordaberry, because he is already in regular contact with Ambassador
Coerr, and Holman wants no problems with him. The importance of the
Ruralistas is that they have already announced support for constitutional reform
in order to return Uruguay to a strong one-man presidency. The other parties are
openly opposed to such reform.

***

In addition to the Ruralistas, Holman asked me to arrange with one of the
legitimate political section officers to begin meeting some of the more liberal
leaders of the Colorado Party, mainly of the List 15 and the List 99. These two
factions will be in the thick of the elections coming up in 1966, and they also
constitute an attractive potential for access agents in the Soviet operations
programme.

For purposes of political reporting Holman will also have his new contact
with Adolfo Tejera, J the Minister of the Interior with Colonel Ventura
Rodriguez, the Chief of Police, and with Colonel Carvajal, Chief of Military
Intelligence. For the time being he will refrain from reinitiating contact with
Colonel Mario Aguerrondo } who was Rodriguez's predecessor as Chief of
Police and a close station liaison collaborator, because Aguerrondo is usually at
the centre of rumours of a move by Blanco military officers against the
government. Also O'Grady will meet more regularly with Juan Carlos Quagliotti,
} the wealthy rancher and lawyer who is active in promoting interventionist
sympathies among military leaders.

In discussing expansion of political contacts Holman said we have to be very
careful to avoid giving the Ambassador any reason to suspect that we're getting
back into political-action operations. When the time comes, he said, the decision

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will be made in Washington and the Ambassador will be informed through
department channels.

This is bad news. All the work with political leaders in Quito only
emphasized how venal and ineffectual they were and in Uruguay the politicians
seem to be even more so. I couldn't be less enthusiastic. I don't want to cultivate
senators and deputies — not even for the Director.

Montevideo 20 July 1964

Another purchase of Chilean currency at the Montevideo branch of the First
National City Bank for shipping by pouch to the Santiago station. This time the
Finance Officer who is in charge of the purchasing operations in Lima and Rio
came to Montevideo to assist in the pick-up from Hennessy J and to count the
escudos afterwards. This one was also worth over 100,000 dollars and, according
to the Finance Officer, is only a drop in the bucket. He says we are spending
money in the Chilean election practically like we did in Brazil two years ago.

We've had serious trouble in the AVENGEFUL/AVALANCHE telephone-
tapping operation. AVOIDANCE, { the courier who takes the tapes around to the
transcribers, reported to Paul Burns, his case officer, that a briefcase full of tapes
was taken from the trunk of his car while he was on his rounds making pick-ups
and deliveries. AVOIDANCE has no idea whether the tapes were taken by a
common thief or by the enemy. Although he claims he has been very careful to
watch for surveillance (negative), the chances are that the tapes will be listened
to, even if only stolen by a thief, in order to determine saleability.

After a discussion with Holman and Burns, I advised Commissioner Otero
and Colonel Ramirez, Chief of the Metropolitan Guard, that we had lost some
tapes and believe all the lines except the Cuban Embassy should be disconnected.
Ramirez agreed that the Cuban line should be retained because of our coming
OAS meeting and the possibility of a break in relations with Cuba. He is also
going to keep several of the contraband lines in operation for cover, although
there is no way of denying the targets of the lost tapes.

For the time being AVOIDANCE will be eliminated from the operation
although he will go through the motions of a daily routine very similar to normal
while continuing to watch for surveillance. The tapes of the Cuban line will be
sent over to the station with the daily police intelligence couriers and we will
give them to Tomas Zafiriadis } who is an Uruguayan employee of the Embassy

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Commercial Section. He will serve as courier between the station and his wife
(AVENGEFUL-3) J who transcribes the Cuban Embassy line. His wife's sister
(AVENGEFUL-5), J the transcriber of the PCU Headquarters line, will also help
on the Cuban Embassy line since her line is being disconnected. Using an
Embassy employee like this is-against the rules but Holman is willing to risk the
Ambassador's wrath to keep the Cuban Embassy line going.

Montevideo 25 July 1964

News is in that the OAS passed the motion that all members should break
diplomatic and commercial relations with Cuba and that except for humanitarian
purposes there should be no air or maritime traffic. It took four years to get this
motion passed — not only CIA operations but all our Latin American foreign
policy has been pointing to this goal. The countries that still have relations, Chile,
Mexico and Uruguay, voted against the motion, while Bolivia abstained. Whether
Uruguay or any other of these countries honour the motion or not is another
matter but headquarters' propaganda guidance is certain to call for an all-out
campaign to force compliance with the motion.

Perhaps with the vote to break relations the AMHALF agents in the
Uruguayan Embassy in Havana, Roosen and Goncalves will be able to get
information out of Perez Freeman. Even with the assistance of Inspector Piriz in
Miami, the Uruguayan diplomats still were unable to exert enough pressure to
force Perez to begin talking about Cuban operations in Montevideo. We need the
information to support the campaign for a break by Uruguay with Cuba through
Perez's revelations of Cuban intervention here. We could alternatively write our
own document based on a little fact and a lot of imagination and attribute it to
Perez, whose presence in the Embassy is public knowledge. Such a document
could backfire, however, if Perez had actually been sent by the Cubans to seek
asylum — this suspicion grows as he continues to refuse to talk — because after the
document was surfaced Perez could escape from the Embassy and issue a public
denial through the Cuban authorities. For the time being Inspector Piriz will
return and we will hold up the false document project until we see how our media
campaign progresses without it.

Station labour operations limp along with Jack Goodwyn J and the AIFLD J
in the lead. This week we had a visit from Joaquin (Jack) Otero, J the
representative of the International Transport Workers' Federation J (ITF) who

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worked with me in Quito last year. Otero is now the chief ITF representative for
all of Latin America and the Caribbean, and he came to assist in a boycott against
meat exports by non-union packing plants. The hope is that his assistance will
help strengthen the democratic unions involved.

Agency-sponsored trade-union education programmes through ORIT are
being expanded. Through the ICFTU International Solidarity Fund, headquarters
is pumping in almost 200,000 dollars to establish an ORIT training school in
Cuernavaca. Until now the ORIT courses have been limited by the space made
available in Mexico City by the Mexican Workers' Confederation J which is the
most important ORIT affiliate after the AFL-CIO. Opening of the Cuernavaca
school is still a year or two away but already the ORIT courses have become an
effective combination with the AIFLD programme in Washington.

As if we don't have enough problems with Argentines, Paraguayans and
Brazilians now we have Bolivians to worry about. A week or so ago the new
Bolivian Ambassador, Jose Antonio Arce, J arrived and the La Paz station asked
that we keep up their relationship with him. He has been in and out of various
government jobs since the Bolivian revolution, most recently as Minister of the
Interior when he worked, closely with the La Paz station. Holman will be seeing
him from time to time, probably no more than is absolutely necessary, so that
when he returns to La Paz this important supporter of President Paz Estenssoro
can be picked up again for Bolivian operations.

Arce's main job here will be to watch the supporters of former Bolivian
President Hernan Siles Suazo, and Siles himself if he settles in exile in
Montevideo as is expected. Siles aspires to succeed current President Victor Paz
Estenssoro in keeping with their custom, since the revolution of 1952, of
alternating in the presidency. Paz, however, against the tradition, was re-elected
in May and must now contend with Siles's plots against him. The La Paz station
is anxious to prevent Siles from returning to the presidency !n Bolivia because of
his recent leftward trends, and his friendly relationship with the Soviets when he
was Bolivian Ambassador in Montevideo during 1960-62. As an initial move to
support the La Paz station I have asked Commissioner Otero, Chief of Police
Intelligence, to make discreet inquiries about Siles' plans among his political
friends and to watch for signs that he will be settling here.

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Montevideo 11 August 1964

Uruguayan compliance with the OAS resolution on Cuba looks very
doubtful. The Foreign Minister on his return from Washington announced that the
NCG will now have to decide whether the OAS resolution should be passed to
the UN Security Council for approval before it can be considered binding. This is
only a delaying manoeuvre to avoid a difficult decision but the most damaging
developments are that Mexico has announced that it will ignore the resolution
and Bolivia is undecided. Unless Uruguay can be made to seem isolated in its
refusal to break, the chances are not good. Moreover, although we have
intensified our propaganda output on the Cuban issue through ABBUZZ-1
considerably, it's no match for the campaign being waged by the extreme left
against breaking relations, which has been carefully combined with the campaign
against the government on economic issues.

Today the National Workers' Convention (CNT), formed only a week ago as
a loosely knit coordinating organization of the CTU and the government workers,
is leading another general strike. Again most of the country's economic activity
has stopped: transport, bars, restaurants, port, construction, wool, textiles, service
stations, schools and many others. The strike was called to show support for
continued relations with Cuba, admittedly a political purpose, but not
unprecedented in Uruguay.

Apart from the strike today, the formation of the CNT is a very significant
step forward by the communist-influenced trade-union movement, because, for
the first time, government workers in the Central Administration (the ministries
and executive) and the autonomous agencies and decentralized services are
working in the same organization as the private-sector unions of the CTU. With
continuing inflation and currency devaluation (the peso is down to almost 23 per
dollar now) the CNT will have plenty of legitimate issues for agitation in coming
months. Besides the Cuban issue the CNT campaign is currently targeted on pay
rises, fringe benefits and subsidies to be included in the budget now being drawn
up for next year.

Montevideo 21 August 1964

Through the AVBUZZ media operation we're getting editorials almost daily
calling for Uruguayan compliance with the OAS resolution to break with Cuba.

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President Alessandri in Chile has done this already, instead of waiting until after
the elections. Today Bolivia announced it is breaking in accordance with the
resolution, leaving only Uruguay and Mexico still with ties to Cuba.

The NCG will surely buckle under such isolation, but getting decisions here
is cumbersome. On important matters, the majority NCG members decide their
position only after prior decisions within each of the Blanco factions represented
on the NCG. Likewise the Colorado factions must decide. Eventually the NCG
meets to formalize the positions taken by each faction earlier and a decision may
emerge. In the case of Cuban relations the Foreign Minister has yet to present his
report on the OAS Conference and related matters even with a month already
passed since the Conference.

For additional propaganda, we have arranged for Juana Castro, | Fidel's
sister, to make a statement favouring the break during a stopover next week at the
Montevideo airport. She defected in Mexico this June and is currently on a
propaganda tour of South America organized by the Miami station and
headquarters. We'll get wide coverage for her statement, and a few days later still
another Miami station agent will arrive: Isabel Siero Perez, J important in the
International. Federation of Women Lawyers, } another of the CA staffs
international organizations. She'll describe the Havana horror show and
emphasize the Soviets' use of Cuba as a base for penetration throughout the
hemisphere.

Montevideo 31 August 1964

The Montevideo association of foreign diplomats recently held their monthly
dinner and Janet and I went along with several others from the Embassy. By
chance we began a conversation with two of the Soviet diplomats and later joined
them for dinner. I wrote a memorandum for headquarters on the conversation —
one of the Soviets, Sergey Borisov, is a known KGB officer — and Holman later
asked me to keep up the contact and see if Borisov is interested. Russell Phipps,
J our Soviet operations officer, isn't the outgoing type and Holman is clearly not
pleased with Phipps's failure to recruit any decent new access agents.

I'll go to the diplomatic association meeting next month but I'm not keen on
getting deeply into Soviet operations. Just keeping the telephone transcripts
analyzed and the files up to date is deadly dreary and requires far too much desk

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work. We shall see if Borisov is interested in continuing the contact — he's the
Consul and lives in the Soviet side of the AVERT house.

I decided to try another Cuban recruitment with the possibility that the
spectre of a break in relations might help us. The target was Aldo Rodriguez
Camps, the Cuban Charge d'Affaires in Montevideo, whose father-in-law is an
exile living in Miami. Last year the Miami station sent the father-in-law,
AMPIG-1, } down to Montevideo to discover the political views on Castro and
communism of the Charge and his wife. He felt from his conversation that
neither seemed to be particularly ardent communists although they were clearly
loyal to the Cuban revolution. At that time it was decided not to try for the
recruitment or defection of either Aldo or Ester but to wait for a future date.

At my request the Miami station proposed to the father-in-law that he come
back to Montevideo as soon as possible for a more direct approach to his
daughter, who appeared to be the more susceptible of the two. If Ester had agreed
to defect we would have made arrangements to evacuate her to Miami, but only
after she had had a few days to work on Aldo. The key to Aldo, the Charge, is
their two young children, to whom he is very attached and when confronted with
their flight to Miami he just might have decided to come along.

Unfortunately, this recruitment failed. The father-in-law came as planned and
made the initial meeting with his daughter but she cut him off at the beginning
and refused any discussion of defection. After two days he went back to Miami,
sad and broken, with no idea if he'll ever see his daughter and grandchildren
again.

Montevideo 4 September 1964

The main Blanco and Colorado newspapers are carrying a torrent of
AVBUZZ-sponsored articles and statements calling for the government to heed
the OAS resolution. However, manoeuvring among the different Blanco and
Colorado NCG members and their factions is causing the outlook on the break
with Cuba to change almost daily. In the past three days there have been a
meeting of the NCG Foreign Relations Commission that was scheduled but didn't
convene for lack of quorum, new scheduling of debate by the full NCG for 10
September, and finally last night an NCG decision to consider the OAS
resolution at a special meeting on 8 September. So far only two of the NCG
members have indicated how they'll vote — one for and one against — and there is

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a good chance we'll lose. Nevertheless, relations with Brazil are again at crisis
point, and the thesis that Uruguay must go along with the majority in order to
assure protection against pressures from Argentina or Brazil is gaining ground.

If they don't break relations this week, I'll write the 'Perez Freeman Report'
right away and we'll make it public either through Inspector Piriz or the
AMHALF agents, Roosen or Goncalves. The Foreign Minister, who is against
the break, is the first guy I'll burn as a Cuban agent — he probably is anyway.

Returns from the elections in Chile today show Eduardo Frei an easy winner
over Allende. Chalk up another victory for election operations. Allende won't be
a threat again for another six years.

Montevideo 8 September 1964

A great victory. Forty-four days after the OAS resolution on Cuba the NCG
has voted to comply. How the vote would go wasn't known for sure until the last
minute when the N CG President changed his position and carried a Counsellor
from his faction with him. Final vote: six in favour of breaking (five Blancos and
one Colorado) and three against (one Blanco and two Colorados).

While the Councillors were debating several thousand pro- Cuban
demonstrators gathered in Independence Plaza in front of Government House
where the N CG was meeting. When the vote was announced a riot was on, and
the crowd surged down the main street, 18 de Julio, breaking store fronts and
clashing with the anti-riot Metropolitan Guard and the mounted Republican
Guard. At least ten police were injured and twenty-six demonstrators arrested
before the water cannons and tear-gas dispersed the mob. Somehow many of the
demonstrators got back to the University buildings further down 1 8 de Julio, and
right now the battle is continuing there with stones and firecrackers being hurled
from the roof of the main University building.

I'm spending the night in the station just in case anything drastic happens that
has to be reported to headquarters. Tomorrow we'll see if any of the Cubans can
be picked off before they leave for home.

Montevideo 10 September 1964

Rioting continues, mostly centred at the University of the Republic buildings
on 18 de Julio. Although some demonstrators abandoned the University during

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the early morning hours yesterday at the urging of Colonel Rodriguez, J Chief of
Police, and Adolfo Tejera, J Minister of the Interior, new riots began yesterday
morning at about ten o'clock and have continued since. The demonstrators' tactics
include, besides the throwing of stones from the University buildings, lightning
street riots at different places to throw the police off guard. Shop windows and
cars parked at our Embassy have also been stoned.

During the early hours of this morning, several US businesses were attacked.
A powerful bomb exploded outside the First National City Bank shattering the
huge plate-glass windows and causing the hanging ceiling in the lobby to fall.
Another bomb exploded at the Western Telegraph Company while an incendiary
device started a fire at the Moore-McCormick Lines offices. General Electric's
offices were also damaged.

The Cubans advised the Foreign Ministry that they'll be leaving on Saturday
for Madrid. Last night with Roberto Musso, } the chief of the AVENIN
surveillance team, I tried to talk to the new code clerk by telephone. Musso,
using the name of someone we already know is in contact with the code clerk,
got him on the telephone and passed it to me. I said I was a friend of Roberto
Hernandez, his predecessor, and would like to make a similar offer of assistance.
He told me to kiss his ass and hung up, but I'll try again if I have time after I've
done the same with the other three — two of whom are new arrivals since the
Hernandez episode.

The Cubans may have made, a serious mistake yesterday, in their haste to tie
up loose ends before leaving. They sent the chauffeur, my agent, to send a
telegram to Tucuman, Argentina with the message, 'Return for your cousin's
wedding'. This can only be a code phrase and the urgency attached to sending the
telegram led the chauffeur to conclude that someone is being called for a meeting
before Saturday. I've passed the addressee and address by cable to the Buenos
Aires station for follow-up and will watch carefully the air and riverboat
passenger lists for this and other names of possible Cuban agents. We know
nothing about the person this was addressed to, but he is probably involved in the
guerrilla activity in the Tucuman area.

Montevideo 11 September 1964

Demonstrators continue to occupy the University and bombings have
occurred at the OAS offices, the Coca-Cola plant, newspapers that promoted the

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break {El Dia, El Pais and El Plata), the homes of four councillors who voted for
the break, and several of the neighbourhood clubs of the factions that favoured
the break. At the University, which is still sealed off by police, minors were
allowed to leave and the Red Cross entered with doctors to distribute blankets
and examine the students, who were suffering from cold and hunger. Any who
decide to leave, however, will have to be registered, identified and face possible
arrest. Colonel Rodriguez's plan is to trap all the non-students among the 400 or
so people occupying the University.

Not to be outdone by the students and political demonstrators, the municipal-
transit system workers struck for three hours this afternoon and the workers of
the autonomous agencies and decentralized services staged a huge demonstration
at the Legislative Palace. Again the issue was budget benefits.

I've spoken to all but one of the Cubans and none has been willing to meet
me. One of them last night invited me to the Embassy for coffee but I thought it
prudent to decline in spite of the freezing wind howling through the telephone
booth. When they leave tomorrow I'll be at the airport just in case — as will Otero,
% Piriz J and other police officers who can take charge if a last-minute defection
occurs.

Montevideo 12 September 1964

This morning the demonstrators at the University surrendered and were
allowed to leave after fingerprints, identification photographs and biographical
data were taken. Forty-three nonstudents were arrested among the 400 who came
out.

At the airport this afternoon several thousand demonstrators came together to
bid the Cubans farewell. When the police began to force the demonstrators back
to a highway some distance from the main terminal building another riot broke
out followed by a pitched battle. The police won easily, using the cavalry
effectively in the open areas around the terminal building, but many were injured
on both sides.

All the Cubans left as scheduled. Only one remains behind: the Commercial
Counsellor, who is being allowed to stay on for a couple of weeks to close a
Cuban purchase of jerked beef.

Of all the Latin American and Caribbean countries only Mexico still has
relations with Cuba. If Mexico refuses to break, as seems likely, the Mexican

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channel could be used for various operational ploys against Cuba — it's even
possible that the Mexican government was encouraged by the station there not to
break with Cuba. Here we've done our job, but poor O'Grady will be working
until the end of the year to send headquarters all the clips on Cuba we've
managed to place in the media.

Efforts by the Miami station to get information out of Earle Perez Freeman
through the Uruguayan diplomats, Roosen and Goncalves, have ended, as these
agents are returning to Montevideo. Although Switzerland is taking charge of
Uruguayan affairs in Havana the Uruguayan Charge is staying to close the
Embassy and to transfer the eight remaining asylees, including Perez Freeman, to
another Embassy. According to the Miami station Goncalves is too insecure and
frivolous to consider incorporating into other operations so I've asked them to
forward a contact plan for Roosen only. Just possibly he could develop a
relationship with a Soviet officer here, but this will depend on a careful analysis
of the possibility that he was known by the Cubans to be working with us.

No sooner do we get the Cubans out than the Chinese communists try to
move in. Only yesterday the Foreign Minister told a reporter that the Chicoms
have asked permission to set up a trade mission in Montevideo and that as far as
he is concerned it would be all right. Holman gave O'Grady the responsibility for
following this one up but as in the case of the Brazilians the details are mine
because we'll use the police intelligence office to get more information.

Manuel Pio Correa, J the new Brazilian Ambassador, arrives tomorrow. He is
pointedly visiting Brazilian military units along the Uruguay-Brazil border on his
way here. Holman will establish contact with him next week.

Montevideo 16 September 1964

In spite of the intensity of station operations against the Cubans and other
matters like the Brazilians, and local communist gains in the trade-union field we
have a serious morale problem that's getting worse as weeks go by. In most
stations, I suppose, the day to day demands of work keep personal dissentions to
a minimum because one doesn't have the time or energy to feud. But here the
problem is with Holman and everyone in the station is affected.

The problem is that Holman expects all the station officers to give
outstanding performances in their particular areas of responsibility but he's not
willing to exert very much effort himself. Besides that he is a great player of

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favourites, and for better or worse he's chosen me as his favourite. He invites me
to lunch several days each week and practically insists that I play golf on
Saturday afternoons with his crowd out at the Cerro Club even though I've made
it clear I'm not enthusiastic. When we're alone he speaks derisively of the other
station officers, especially O'Grady, Phipps and Zeffer. O'Grady, in fact, has
turned into a bundle of nerves under Holman's criticism, which he's sure is the
cause of his increasingly frequent attacks of hives. Usually Holman's criticisms
are about shortcomings in language or failure to make new recruitments but
sometimes he even criticizes the wives.

His attitude would be understandable, perhaps, if his own work habits were
more inspiring, but he avoids work as much as possible and requests from other
stations like Rio or La Paz or Buenos Aires seem like personal insults to him. Just
the other day when we were playing golf, Holman told me that in fact he was
rather relieved when the recruitment of Hernandez, the Cuban code clerk, failed.
He said he came to Montevideo for a relaxing last four years before retiring and
only hoped to keep operations to a minimum and the Ambassador happy. If
Hernandez had been recruited, headquarters would have bothered us constantly
with advice and probably would have sent down' experts' to tell us how to run the
operation.

Holman is not only determined to keep operations to a minimum. At night or
on week-ends when priority cables are received or have to be sent Holman
refuses to go to the station to take action. He either sends O'Grady in to bring the
cable out to his house in Carrasco — against all the rules of security — or he has
the communications officer bring it out to him. If another officer has to take
action he simply calls that officer to his house.

I'm not sure what to do since I'm the only officer Holman thinks is doing a
good job — nothing to be proud of, it could even be the kiss of death. Warren
Dean told me before leaving Quito that Holman isn't considered one of the more
outstanding Chiefs of Station in the Division, but he's apparently protected by
Ray Herbert, the Deputy Division Chief, who is Holman's best friend.

Montevideo 25 September 1964

Today the Congress approved the new budgets for the state-owned banks
with provisions for a 30 per cent salary increase retroactive to January of this
year plus improved fringe benefits. Political motivation prevailed at the last

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moment 'ven though the NCG had previously rejected such generous increases,
which is not to say they aren't justified when inflation is taken into account. The
main problem is that this increase of 30 per cent will set the standard for
demands by all the other government employees which in turn will accelerate
inflation with new budget deficits.

The new National Workers' Convention, heavily influenced by the PCU, is
also intensifying its efforts to unify the government and private-sector workers
through a series of rallies and marches in coming weeks, culminating in a mass
meeting in early December to be called the Congress of the People with
representation from the trade unions and other popular mass organizations. At the
Congress of People they will formulate their own solutions to the problems
afflicting this country — not a bad idea what with the mess they're in.

Relations between Uruguay and Brazil are back at boiling-point. Police in
Porto Alegre, the capital of the Brazilian state bordering Uruguay, have just
discovered a new plot by Goulart and his supporters to foment a communist-
oriented takeover. A written plan, supposedly found on a university student,
included the formation of terrorist commando units. Earlier, another plot was
discovered in Porto Alegre involving Army officers loyal to Goulart. Here in
Montevideo, the 300 Brazilian exiles have formed an association to help those
unable to get along financially. However, at the first meeting considerable
discussion was devoted to ways in which the military government could be
overthrown, and Brizola's wife, who is Goulart's sister, was elected to the
association's governing board.

In tracking down the possibility that the Chinese communists will establish a
trade mission here, we discovered that permission has in fact been granted, not to
the Chinese but to the North Koreans. They have just arrived and are taking a
house on the same street as the Soviet Legation. Holman asked Tejera, J the
Minister of the Interior, what could be done to keep them from staying
permanently, but Tejera made no promises. Already head-quarters is asking for a
programme to get them thrown out.

Two recent developments of note have occurred in our otherwise stagnated
student operations. A new publication aimed at university and secondary students
is now coming out: it's called Combate % and is published by Alberto Roca. %
Also, at the Alfredo Vazquez Acevedo Institute, which is the secondary school
associated with the University and as such the most important on that level, the
student union supported by the station has just defeated the FEUU-oriented

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candidates for the fifth straight time. Sooner or later our work with this group, the
Association of Preparatory Students, J is bound to be reflected in the FEUU.

Montevideo 29 September 1964

Montevideo was alive with new rumours this morning that senior Blanco
military officers are planning a coup against the government. Cause of the
rumours is a dinner given last night by Juan Jose Gari, the long-time station agent
in the Ruralist League and currently President of the State Mortgage Bank, in
honour of Mario Aguerrondo, % former Montevideo Police Chief, who was
recently promoted from Colonel to General. Among the guests at the dinner were
other Ruralista leaders and practically all of the top military commanders from
the Minister of Defense down. Holman checked out the rum ours with Gari and
with Adolfo Tejera, the Minister of the Interior, while I checked with Colonel
Roberto Ramirez, Chief of the Metropolitan Guard, who was also there. The
dinner was simply an expression of homage to Aguerrondo but the rumours,
entirely unfounded, reveal just how nervous people are that a military takeover
may occur, what with the increasing strength of the PCU-dominated unions and
the government's incapacity to slow inflation. New strikes are being planned.

Holman thinks he has at last got agreement from the Minister of the Interior,
Adolfo Tejera, for setting up a Public Safety mission for work with the police
under AID. For some time Colonel Rodriguez, the Chief of Police, has wanted
the programme but the delicate question of foreigners working openly with the
police has caused Tejera to delay his decision. No wonder Tejera has now finally
decided. He has just testified before the Budget Commission of the Chamber of
Deputies that his ministry is too poor to buy paper, the police lack uniforms,
arms, transport and communication, and the fire departments lack hoses,
chemicals, trucks and other equipment.

It's not just a question of money and equipment for the police; they are also
very poorly trained. Not only are bank robberies frequent, for example, but
successful escapes often involve not only stolen cars but motor scooters,
bicycles, trucks, buses — even horses. In one recent robbery the getaway car
wouldn't start so the robbers simply walked down the street to the beach and
disappeared into the crowd. In August four thieves were caught robbing a house
on the coast near Punta del Este but escaped to the nearby hills, and after a two-
day gun battle they slipped through a .cordon of several hundred police. Their

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escape car, however, got stuck in the sand and they walked down the beach,
robbed another house, were again discovered, but this time escaped in a rowing-
boat. For six days the police chased them in cars, helicopters and on foot but they
finally escaped completely — carrying their loot on their backs as they rode their
bicycles down the main highway into Montevideo.

The competence of the AVALANCHE service is similarly limited in its
attempts to suppress terrorist activities. Undoubtedly some of the bombings at the
time relations with Cuba were broken were the work of the terrorist group led by
Raul Sendic. Last March Sendic returned from several months in hiding in
Argentina after an arms theft from a shooting club in Colonia. He arrived in a
light aircraft at a small airport near Montevideo, but when discovered he simply
rushed past the police guard and escaped in a waiting truck. The following month
4000 sticks of dynamite were stolen from a quarry and a few days later enough
caps and fuses to explode it disappeared from another site. All the police could
report was that these thefts may have been the work of the Sendic band.

Building up the police is like labour operations — we're still at the beginning
with a long road ahead requiring training, equipment, money and lots of patience.

Montevideo 7 October 1964

This is the final day of the forty-eight-hour strike in the autonomous agencies
and decentralized services. Only the electric company and the state banks have
been operating although the banks have been stopping work for one hour each
shift in solidarity with the others. Yesterday the striking government workers,
CNT unions and FEUU held a demonstration at the Legislative Palace to demand
salary increases equivalent to the 30 per cent won two weeks ago by the
government bank workers.

Two days ago all the privately owned gasoline stations were closed
indefinitely in an owner's strike against the government for a higher profit margin
from the state-owned petroleum monopoly, ANCAP, which also has a large
number of gasoline stations. As the ANCAP workers are participating in the
forty-eight-hour government workers' strike, no stations were open yesterday or
today. More strikes and demonstrations coming up: teachers, the ministries,
postal workers and some unions in the private sector.

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Montevideo 17 October 1964

Commissioner Otero and others have had a stroke of luck against the Sendic
group of terrorists. Two leaders of the group, Jorge Manera, an engineer in the
electric company, and Julio Marenales, a professor in the School of Fine Arts,
were arrested in an unsuccessful bank robbery. They confessed that their purpose
was to aid the sugar-cane workers of Bella Union and that the focal point for their
activities is the School of Fine Arts. Police seized arms and are searching for two
other members of the group. Otero's leads from these arrests are very important
because this is the only active armed group. If he can get good information from
the interrogations we may be able to target some recruitment operations against
them. So far they've been completely underground.

We've decided to hook up the AVENGEFUL lines again on the Soviets and
the PCU. I'll also put a line on Prensa Latina and another on the Czech Embassy
which has taken over the Cubans' affairs. If the transcribers can manage I'll also
put a tap on the telephone of Sara Youchak, a young activist in the FIDEL
political front who has all the marks of being a Cuban intelligence agent.

Still no sign of who was behind the theft of the tapes from AVOIDANCE'S
car. He'll now take over the courier duties again so that we can stop using the
Embassy employee. Colonel Ramirez, Chief of the Metropolitan Guard, is really
happy about AVENGEFUL. A few days ago his men, acting on data from
telephone taps, intercepted a truck containing 600 transistor radios that had been
off-loaded from a light aircraft running contraband from Argentina. The 300,000
pesos that the haul is worth will be divided among Ramirez and his men.

Meanwhile the government announced that they simply had no money to
start paying September salaries — even the police and the Army, always the first
to be paid — have received nothing for September. Nevertheless, the NCG has just
approved the 30 per cent increase for employees of the state-owned telephone,
electricity and petroleum monopolies.

Montevideo 25 October 1964

Perez Freeman has been killed trying to escape from the Uruguayan Embassy
in Havana! The story was carried in wire-service reports this morning and said
that he had been trying to hold the Uruguayan Charge, who is still trying to
arrange for another Embassy to take over the asylees, as hostage. The Miami

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station is attempting to check the story but no confirmation so far. If only the
Mexico City station had handled his defection correctly in January we would
have all his information and he'd be basking in the Miami sun.

Montevideo 31 October 1964

On the Perez Freeman case the Foreign Ministry received what is being
called the longest cable in its history — some 1300 groups in code from the
Embassy in Havana. The communications office of the Foreign Ministry,
however, was unable to decode it for 'technical' reasons — meaning, probably, that
too much effort was involved — so the Foreign Minister called the Embassy by
telephone to get the story the Charge had put in the cable.

Perez Freeman, according to the Charge, was the leader of a group of four
asylees who took the Charge hostage and escaped from the Embassy in the
Charge's car. Cuban security forces gave chase and when the escaping group
arrived at a roadblock Perez Freeman jumped out of the car and was shot running
away. The others were taken to the fortress where executions are normally held.
I've asked the Miami station to try to verify the Charge's version.

Hernan Siles Suazo, the former Bolivian President, was caught plotting and
was deported by President Paz Estenssoro. He's arrived back in Montevideo and
we're supposed to report any signs that he may be returning to Bolivia. Paz
Estenssoro is in serious trouble right now, and the La Paz station wants to head
off any complications from Siles. Holman continues to meet with Jose Arce, the
Bolivian Ambassador, to pass tidbits from police intelligence. Yesterday Arce
gave a press conference to assure everyone that the rebellion now underway
against Paz Estenssoro is communist-inspired and doomed to failure. He
emphasized that Paz has the full support of the Bolivian people and that current
problems have been blown all out of proportion — adding that the minority groups
opposing Paz are so few in number that they could all be driven off together in a
single bus. So far ex- President Siles hasn't moved from Montevideo but Otero
has posted a special 'security' guard for Siles in order to watch him more closely.

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Montevideo 6 November 1964

In Bolivia President Paz has been overthrown by the military and allowed to
go to Lima in exile. Ambassador Arce has resigned and has announced that he
plans to continue living in Montevideo for a while. Meanwhile ex-President Siles
has started to pack and will be leaving for Bolivia within a few days. Holman's
not very happy, though, because rumours are strong that Paz Estenssoro is
coming to live in Montevideo — meaning exile-watching will continue, only with
new targets.

Late tonight the Budget was finally passed by the Chamber of Deputies, ten
minutes before the final constitutional deadline and after forty hours of
continuous debate. Passage was made possible by a last-minute political pact
between the Blancos, who lack a majority in the Chamber, and the Ruralistas,
Christian Democrats and a splinter faction of the Colorados. Opinion is
unanimous, .even among Blancos, that the Budget is unworkable because of its
enormous deficit and that not even the devaluation of the peso included in the
Budget exercise — the third devaluation since the Blancos took over in 1959 —
will allow for printing enough new money to cover the deficit.

I've seen my Soviet friends at several recent diplomatic receptions and have
become acquainted with a couple of Romanians and Czechs as well.
Headquarters has reacted favourably and asked that I develop the relationship
further with the Soviet Consul, Borisov. Tomorrow night I go to the Soviet
Embassy as the Ambassador's representative for their celebration of the October
Revolution. Phipps tells me to expect plenty of vodka, caviar and singing.

Montevideo 28 November 1964

Relations between Uruguay and Brazil are heating up again although
Goulart's importance is diminishing fast because he has heart trouble and recently
underwent an operation. Brizola is the centre of controversy now because of
recent declarations against the Brazilian government that were published both
here and in Brazil. Manuel Pio Correa, J the Brazilian Ambassador, has filed
another official protest against Brizola's conduct. Perhaps more important are the
recent arrivals of two former high officials in Goulart's government, Max de
Costa Santos, formerly a Deputy, and Almino Alfonso, former Minister of Labor.
Both are far-left and Pio has protested against their arrival here, claiming they

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entered Uruguay illegally and cannot obtain asylum because they had already
been granted asylum in other countries following the military coup. The Minister
of the Interior, Adolfo Tejera, J is studying the case and Holman is urging him to
throw them out.

In Brazil, the federal government has been forced to take over the state of
Goias, throwing out the state government because of what is being described as
communist subversion there. Yesterday the Brazilian Foreign Minister blamed
the intervention in Goias (the military government's worst crisis yet) on the
activities of exiles in Montevideo. Today President Castelo Branco told the
Brazilian Congress that he had ordered the takeover in Goias in order to forestall
a plot led by Brizola from Montevideo. New protests from Pio Correa are certain.

Outright military intervention in Uruguay by Brazil is getting closer. We've
had several alarming reports lately through the communications intelligence
channel based on monitoring of the military traffic in southern Brazil. According
to these reports the Brazilian Army is ready at any time to implement a plan to
invade Uruguay and take over Montevideo in a matter of hours.

Montevideo 2 December 1964

I have been trying in recent weeks to follow up some of the mass of leads on
probable agents and operations of the Cubans. Most of these leads have come
from telephone tapping, surveillance, letter intercepts and monitoring of
communications channels. Several of these cases have interesting aspects.

I continue to receive the mail addressed to the Cuban intelligence support
agent, Jorge Castillo, through the postman AVBUSY-1. In May the Cubans
changed the cryptographic system of their network in Latin America (the
ZRKNICK agents), probably as a result of the near-recruitment of Hernandez
here and of the defection of the Cuban intelligence officer, AMMUG-1, J in
Canada. Since then the National Security Agency has been unable to decrypt the
messages which continue, nevertheless, to be sent to agents operating in several
parts of Latin America. Although I haven't intercepted any mail that would
appear to be sent by the Cuban agent believed to be working in Lima or La Paz, I
have received some very suspicious letters mailed from a provincial Uruguayan
town.

Telephone tapping and suveillance of Sara Youchak, a frequent overt contact
of one of the Cuban intelligence officers before the break in relations, revealed

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that she travels frequently to Buenos Aires, where she sees her cousin, whom the
Buenos Aires station has connected with guerrilla activities in northern Argentina
and with communist student organizing. Moreover, Sara has a first cousin (whom
she has never seen) who is a State Department Foreign Service officer. Soon I'll
ask headquarters to check with State Department security people to see if we
might use the cousin to place an agent next to Sara.

Through monitoring of airline reservation communications the National
Security Agency has discovered that the manager of the Montevideo office of the
Scandinavian Airlines System, Danilo Trelles, is in charge of assigning pre-paid
tickets for passengers from many Latin American countries on the SAS flights
that start several times each week in Santiago, Chile, and arrive after a number of
stops in Prague. The pre-paid tickets are usually requested by the Prague office of
Cuban a Airlines and are intended for Latin Americans travelling to Cuba.
Because the pre-paid tickets are sent as 'no-name', Trelles can assign them and
assure that the identity of the traveller is protected. What we are trying to
discover is how Trelles is advised of the identities of the travellers. The answer
may be through the Czech or Soviet embassies which Trelles's assistant, Flora
Papo, often visits. Papo in fact takes care of the details of this travel-support
operation and the A VENIN surveillance team has turned up interesting
vulnerability data on her.

AVENGEFUL telephone tapping on the Montevideo office of Prensa Latina,
the Cuban wire service, seems to reveal what I suspected — that PL is serving as a
support mechanism for Cuban intelligence operations now that the Embassy is
gone. The monthly subsidy for the office is about five thousand dollars, which is
wired to the Montevideo branch of the Bank of London and Montreal from the
Bank of Canada. The tap also revealed that the total of all the salaries, rent,
services of Press Wireless and other expenses amount to only about half the
subsidy. Headquarters is currently processing clearance for an Assistant Manager
of the Bank of London and Montreal whom I already know rather well and whom
I'll recruit for access to cheques on the PL account. It would be interesting to
discover the recipients of the unaccounted half of the subsidy, but right now I can
still only suspect that it is used for intelligence operations.

We have a new case officer for operations against the Communist Party of
Uruguay and related organizations. He's Bob Riefe } who was the chief instructor
in communism for the headquarters' portion of the JOT course five years' ago.
Riefe has a Ph.D. and has spent his entire career in training, but he was able to

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wangle an assignment in the DDP as part of the Office of Training's 'cross-
fertilization' programme. A couple of years ago he was to have been assigned to a
WH station but a heart-attack delayed him. Hopefully I can convince Riefe to
take back the former Cuban Embassy chauffeur, AVBARON- 1 , whom I've been
unsuccessfully trying to push back into PCU work since the Cubans left.

Riefe's predecessor, Paul Burns, is returning to headquarters rather
discouraged after four years here without getting a really high-level penetration
of the PCU. In recent months he has spent most of his time struggling with the
AVPEARL audio penetration of the PCU conference room. The bugged porcelain
electrical sockets arrived from headquarters some months ago but when
AYCAVE- 1 , the PCU penetration agent assigned to make the installation, got his
next guard duty he found that the paint flecks were not quite exact. Back in the
station the paint was corrected by Frank Sherno, J a TSD technician who is
setting up a regional support shop in the Buenos Aires station to service Uruguay
and Chile as well as Argentina. (This new shop will give us much faster service
than the Panama station regional support base for technical operations.)

At last a listening post has also been found — it's a tiny apartment in a
building behind the PCU headquarters but located where the carrier- current
transmitters in the sockets can be picked up. Then AVCAVE-1 got guard duty
again, Sherno came over from Buenos Aires again, and during the course of
guard duty the agent was able to replace the original sockets with our bugged
ones for testing. Sherno in the LP had transmitters to test the switches (one
frequency to turn them on and another frequency to turn them off) and a receiver
to test the RF and audio quality. Then AVCAvV-1 removed our sockets and
replaced the original ones since there was no way to. get a message from Sherno
back to him if they hadn't worked properly.

The testing operation was very risky, both for AVCAVE- 1 and for Sherno in
the LP. Guard duty at PCU headquarters is always in pairs and for AVCAVE-1 to
slip loose from his colleague and install the bugged sockets was difficult even
though it only involved the use of a screwdriver. Getting Sherno in and out of the
LP with the transmitters and receivers was also dangerous because almost all the
people around the PCU headquarters are party members and suspicious of
strangers. Somehow both AVCAVE-1 and Sherno came out undiscovered, and
now Riefe will proceed with finding a permanent LP-keeper and with the final
installation by AVCAVE- 1 . According to Sherno the signal is excellent.

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Montevideo 4 December 1964

Pio Correa, J the Brazilian Ambassador, is making a loud noise over the two
former Goulart government leaders, Max da Costa Santos and Almino Alfonso.
Adolfo Tejera, the Minister of the Interior, recommended to the NCG ten days
ago that they be expelled because they had indeed entered Uruguay illegally. A
week later the Foreign Minister announced that they can remain in Uruguay
because their documentation is, after all, in order — according to a Ministry of the
Interior investigation. Furious, Pio Correa has filed another protest note asking
for their expulsion and Brizola's internment — complaining also that Brizola has
several light aircraft at his disposal for courier flights to and from Brazil.

The NCG has passed this latest protest back to the Ministers of the Interior
and Foreign Relations with an instruction to the latter that the Brazilian
government be asked for an explanation of the recent repeated violations of the
border by Brazilian military vehicles. Three aircraft belonging to Brizola were
also grounded. Commissioner Otero's } Intelligence and Liaison Department of
the Montevideo Police, however, have arrested one of Colonel Camara Sena's J
spies — a Navy sergeant who came posing as a student but was caught surveilling
one of the exiles. He was charged with spying but set free when the Brazilian
Embassy intervened.

According to Holman, Pio Correa is going to keep protesting until Brizola
either leaves Uruguay or is interned and until a favourable resolution of the
Alfonso and Santos cases. Otherwise we can expect Brazilian military
intervention.

Montevideo 18 December 1964

A new victory for the station at Georgetown, British Guiana, in its efforts to
throw out the leftist-nationalist Prime Minister and professed Marxist, Cheddi
Jagan. In elections a few days ago lagan's Indian-based party lost parliamentary
control to a coalition of the black-based party and a splinter group. The new
Prime Minister, Forbes Burnham, is considered to be a moderate and his
ascension to power finally removes the fear that lagan would turn British Guiana
into another Cuba. The victory is largely due to CIA operations over the past five
years to strengthen the anti- Jagan trade unions, principally through the Public
Service International J which provided the cover for financing public employees

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strikes, lagan is protesting fraud — earlier this year he expelled Gene Meakins, J
one of our main labour agents in the operation, but it was no use.

Montevideo 25 December 1964

Christmas in Uruguay is like the 4th of July at home. It's hot and everybody
goes to the beach — and it's almost completely secular with the official
designation 'Family Day'. (Holy Week is similarly changed to 'Tourism Week' and
most of the country goes goes on vacation.) How different from Ecuador where
the Church is so powerful.

I stopped over at O'Grady's house this morning for a little Christmas cheer
but ended up commiserating with him over the latest Holman outburst. A few
days ago O'Grady and his wife gave a little cocktail party and buffet as a
welcome for the new cp operations officer, Bob Riefe. Holman didn't hold his
drinks very well that night and soon began to lash out at O'Grady and then at
Riefe and Riefe's wife. It was all pretty unpleasant and now O'Grady's hives are
back out in full bloom, in spite of the fact that we all know now that Holman is
coming out the real loser.

Apparently certain powers in headquarters are not entirely pleased with the
station's performance, particularly in the area of Soviet operations, and Holman is
to be transferred in about six months to Guatemala. His replacement as Chief of
Station will be a man named John Horton, J who came to WH Division from the
Far East Division along with so many others after the Bay of Pigs invasion.
Holman has-only just got official notification but he heard the change was
coming, some time ago from his protector Ray Herbert, the Deputy Division
Chief. Although Herbert was able to salvage the situation somewhat by arranging
Holman's reassignment to Guatemala, Holman's bitterness keeps growing. Russ
Phipps, the Soviet operation officer, is now almost up to O'Grady's level on
Holman's list of persons to blame, but Riefe was attacked because he's obviously
part of the new crew being assembled by Horton. Clearly Holman resents being
edged aside by newcomers from FE Division because his days in Latin America
go back to World War II.

What O'Grady and Phipps, and Alexander Zeffer too, are worried about is
that Holman's search for scapegoats will seriously damage their careers and
chances for future promotions and assignments. A couple of months ago I
chanced across the combination to Holman's safe-cabinet and out of curiosity

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began to read some of the 'Secret-Informal Eyes Only' letters that he exchanges
more or less weekly with Des FitzGerald, J the Division Chief. I was so shocked
at the knives he was putting into everyone but me that I gave the combination to
O'Grady Now he's reading the letters — which only makes his hives worse — and I
think he's passed the combination on to Zeffer and Phipps. The dangerous part is
that Holman is not so damning in the official fitness reports on the other officers,
but that he cuts them so badly in these letters that they aren't supposed to see.
Reading these letters, in fact, is highly dangerous, but all these officers are
competent and certainly harder workers than Holman. I wonder if we can hold
together for these next six months without rebellion.

Montevideo 15 January 1965

Some decisions on Brazilian affairs indicate the Blancos are persisting in
efforts to elude Brazilian pressures. The NCG voted not to give political asylum
to Almino Alfonso and Max da Costa Santos on the grounds that they had come
to Uruguay after having received asylum in other countries. However, they were
given ninety-day tourist visas which isn't going to please Pio Correa. No decision
on Brizola was needed because he promised the Minister of the Interior that he'll
be leaving Uruguay no later than 23 January. On the other hand Brizola will be
allowed to return to Uruguay in which case he can request political asylum again.

Two important new exiles are now here. One, a former Brazilian Air Force
officer and one of its most highly decorated men, escaped from a military prison
in Porto Alegre and made it across the border. The other is a former deputy who
was in exile in Bolivia until ex-President Paz was overthrown, but came here
recently for fear the new rightist regime in Bolivia would expel him to Brazil.
Both are important supporters of Brizola.

In a personal complaint to the NCG President, Pio Correa tried to get action
started on the fourteen recent requests he has made regarding the exiles. This
prompted several notes from the Uruguayan Foreign Ministry but resistance
continues. The Brazilian press, meanwhile, probably at the government's
instigation, has started a campaign to raise the tension by speculating that
relations are about to be broken and that commercial pressures are being exerted
on Uruguay. For their part the Uruguayan and Brazilian Foreign Ministers have
denied that relations are about to be broken, while in the NCG a Colorado

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Councillor called for the Foreign Minister's resignation for his inept handling of
Brazilian problems.

These Brazilian affairs are a nuisance for me because I have constantly to be
checking rumours and requesting special reports from the police on the exiles for
Holman or O'Grady to use with Pio Correa, Fontoura and Camara Sena. Who
could believe a handful of exiles here could be a threat to the Brazilian military
government? Even so, headquarters keeps insisting that we help the Rio station in
their operations to support the military.

If the military in Brazil weren't so strongly anti-communist our support for
them would be embarrassing. In recent weeks the Brazilians have had an internal
crisis going over the question of whether the Navy or the Air Force is to operate
the aircraft of their only aircraft-carrier — a decrepit cow discarded by the British.
Two ministers of the Air Force have recently resigned over decisions by the
President to have the Navy fly the airplanes, but he changed his mind again and
yesterday the Minister of the Navy resigned. Now, it seems, the Brazilian carrier
strike force will have Air Force pilots.

To make matters with Brazil worse, a few days ago the commercial offices of
the Brazilian Embassy were bombed, although little damage was done because
the bomb was poorly placed. However, written on a wall nearby was the name
'Tupamaros' which appeared at several other recent bombings. Commissioner
Otero, Chief of Police Intelligence, is trying to find out who these people are. He
thinks they may be the Sendic group. Raul Sendic, the revolutionary socialist
leader, who had been arrested on a contraband charge in an Argentine town near
the border, was recently released, and may have returned to Montevideo.

Inability to curb these bombings illustrates the difference between good
penetrations of the CP and related groups and bad ones. In Ecuador a group like
this would have been wiped up by now. Nevertheless, Riefe doesn't take the
bombings very seriously and seems intent on concentrating on the strictly-
reformist PCU.

Montevideo 4 February 1965

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At Headquarter' s instruction I'm continuing to develop the relationship with
Sergey Borisov, the Soviet Consul and KGB officer.

Last Sunday Janet and I went with Borisov and his wife Nina to the beach.
First they came out to our house in Carrasco and then Borisov drove us out to a
beach near Solymar. His driving is very odd and made me nervous — practically
like a beginner. Not so his chess, of course, where he beat me easily. Phipps tells
me that Borisov knows I'm a CIA officer without any doubt, so I wonder
sometimes why I bother meeting him. Headquarters says that's just the reason to
keep the relationship going — on the chance that Borisov could be disaffected and
trying to 'build a bridge.'

Holman has asked me to take over complete responsibility for the satellite
missions, which include Czechs, Romanians, Bulgarians, Poles and Yugoslavs.
For East European countries we have no elaborate operational procedure such as
we do for the Soviets. Headquarters apparently has such high-level penetrations
in those countries that the painstaking work of spotting and placing access agents
next to them simply isn't justified. Successes in the case of the satellites have
come from CIA officers in direct contact with them. As a start, however, I'm
going to bring the files up to date on the personnel of each mission and next week
I'll try to get the Foreign Ministry protocol files through AVDANDY- 1 for that
purpose. Then I'll start a photographic album and get reports from headquarters
on the new arrivals. Right now I'm not even sure who they all are, because
Phipps has been concentrating on the Soviets and ignoring the Eastern
Europeans.

Last week I made my first visit to the AVENGEFUL telephone-tapping LP at
the Montevideo Police Headquarters. I took along a visiting TSD technician who
wanted to see how the equipment is being maintained — in the operational files I
couldn't find the last time it was visited by a station officer, probably some years
ago. The room is located right over the office of the Deputy Police Chief on the
same floor as Commissioner Otero's Intelligence and Liaison Department.
However, there is a locked steel door between I and E and the LP — in fact the
normal way to enter the LP section of the floor is by an elevator from the
underground garage for which a special key is necessary. Off the same hallway as
the LP are several rooms that I was told are used by the Chief and Deputy Chief
as rest quarters.

DeoAnda J and Torres, } the technicians and LP operators, do an excellent
job in keeping up the equipment but they have an uncomfortable situation with

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the heat. Those tube-operated Revere recorders give off so much heat that the
room is stifling in the summer. I promised to get them an air-conditioner that
they'll install either in a small high window to the inside hallway, or else they'll
have to make another opening. The LP has no windows to the street and only the
one small window to the hallway — good security but no ventilation.

Montevideo 7 February 1965

Investigation of Prensa Latina (the Cuban wire service) has got more
interesting. Because of procedural agreements I had to postpone recruitment of
my friend at the Bank of London and Montreal until the, intelligence chief of his
country's service spoke to him and to his superior, the bank manager — whom I
also know from the Cerro Golf Club. This cumbersome process completed, I
started reviewing the Prensa Latina account. As cheques are not returned to the
account holder in Uruguay, it was easy to discover that practically all the money
is paid out in cash. Legitimate expenses still total only about half of the monthly
subsidy, so the rest of the money is clearly going into 'other activities'. The next
step is to check the financial reports filed with government offices to see if we
have a case for shutting down Prensa Latina for falsifying financial reports or
similar irregular procedures inconsistent with the subsidy.

Montevideo 11 February 1965

At last the NCG voted to intern Brizola — an accomplishment that has taken
every ounce of Pio Correa's J considerable energy and persistence. Typically,
however, the NCG decided to let Brizola pick the town where he wants to live —
any except Montevideo and no closer than 300 kilometres to the Brazilian border.
Now we can begin to relax about these messy Brazilian operations.

Pio Correa has done an excellent job bringing the Uruguayans into line over
the exiles, which made possible the Foreign Minister's pleasant visit. Brizola,
incidentally, has chosen the beach resort of Atlantida as the town where he'll be
interned. Otero will continue the logs by 'security guards' from police intelligence
— it's only 35 kilometres from Montevideo where Brizola could still be fairly
active — and right at the limit on proximity to Brazil: 301 kilometres.

Final approval for the AID Public Safety Mission was obtained by Holman
from Tejera, the Minister of the Interior, and last month the first Chief of Public

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Safety arrived. For the time being we will refrain from putting one of our officers
under Public Safety cover, and I'll continue to handle the police intelligence
operation. After the Mission gets established through straight police assistance
(vehicles, arms, communications equipment, training) we'll bring down an officer
to work full-time with Otero's intelligence department. About the best I can do
part-time is to keep AVENGEFUL going and increase Otero's subsidy for
intelligence expenses.

These Montevideo police are getting the Public Safety assistance none too
soon. In another bank robbery just three days ago the policeman on guard got
excited and fatally shot one of the customers — mistaking the customer for one of
the robbers. Seeing this, the robbers, a man and a woman, rushed out of the bank
leaving the money behind. They walked for several blocks and hailed a taxi
which took them to the other side of the city. Since they had no money to pay the
fare, the robber gave his pistol to the taxi driver in payment. The driver, however,
heard of the robbery on the radio and turned the pistol over to the police. On
checking the weapon the police discovered that it was the service revolver of one
of their own policemen. He was arrested at home and admitted forcing his wife to
go along with him on the robbery. The last time that particular bank had been
robbed was in 1963 by two women (or men?) dressed as nuns who were never
caught.

New strikes: Montevideo buses and trolleys for payment of subsidies and
salaries; port workers for last year's Christmas bonus; city employees for
retroactive fringe benefits. Inflation during 1 964 was almost 45 per cent and last
month reached the 3 per cent per month rate. The Blancos are trying to put
through another devaluation, while the peso is unsteady and has now slipped to
30.

Montevideo 25 February 1965

I got an important hit on the postal intercept operation against Jorge Castillo,
the Cuban intelligence support agent used as an accommodation address for
Agent 101 in Lima or La Paz. The letter-carrier, AVBUSY-1, offered me a large
brown manila envelope the other day but it was addressed not to Castillo but to
Raul Trajtenberg who lives in the same huge apartment building as Castillo. I
took the envelope because it was sent from Havana and the words Edificio

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Panamericano in the address were underlined just as they were to have been
underlined in correspondence to Castillo.

I arranged with AVBUSY-1 to keep the envelope for several days in case
headquarters wanted to send down a secret-writing technician to test the contents.
Inside were Cuban press releases and clippings from Havana newspapers.
Headquarters answered my cable by sending a technician immediately from
Panama (the Buenos Aires regional support technician is a specialist in audio and
photo rather than SW techniques) and he was going to try to 'lift' secret writing
from the contents. However, we couldn't find a letter press fast enough so I had to
return the envelope to AVBUSY-1 without the test.

On checking station files on Trajtenberg I found a letter that he had written
from Havana two years ago that was intercepted through the AVIDITY operation.
Strangely, the handwriting on the manila envelope was exactly the same as that
of the Trajtenberg letter written from Havana — meaning, probably, that
Trajtenberg addressed the envelope to himself and, along with other self-
addressed envelopes, gave it to a Cuban intelligence officer for later use.
Trajtenberg's mail will also be given to me regularly by AVBUSY-1 although
Trajtenberg is leaving soon to study at the University of Paris. So far other
Trajtenberg intercepts reveal that his father (he lives with his parents) is
manipulating large sums of money in a numbered Swiss bank account. The Berne
station advised that the Swiss security service will provide data from numbered
accounts but insist on all the details and reasons — which headquarters doesn't
want to give right now because of the sensitivity of other cases in this same
Cuban network.

Montevideo 18 March 1965

Washington Beltran, the new NCG President, has had plenty of labour unrest
in spite of the recent carnival distractions: railway workers striking for the 1964
retroactive pay increases, the interprovincial buses stopped again for back
salaries and subsidies, the Montevideo bus and trolley employees also striking for
salaries and subsidies, and public-health clinics and hospitals struck by
employees demanding their January salaries. Today there is no public
transportation in Montevideo except taxis, and the Sub- Secretary of the Treasury
just announced that government receipts amount to only half the daily cost of the
central administration.

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We've been trying to find a little relief from the gloomy atmosphere of
dissention in the station. Holman's letters to Fitz- Gerald are getting even worse
if that's possible and each time O'Grady reads the file his hives start up again.
Bob Riefe, the CP officer, has a way of reading the news of each day's
mismanagement by the Uruguayan government with loud rhetorical questioning
broken by equally loud and contemptuous guffaws and cackles. His approval of
the strikes and other agitation by his target group are shared by all of us, though
perhaps for different reasons, as we watch political partisanship prevail over the
reforms (land, fiscal) and austerity needed to stop the country's slide. Russ
Phipps, who sits on the other side of me from Riefe, pores over his surveillance
reports, telephone transcripts and observation post logs, muttering from time to
time that's it not the PCU but the Soviets who deserve the honour of putting this
country straight.

**#

Riefe and Phipps always catch me in the middle because I'm supposed to be
building up the police intelligence department and developing political contacts.
When things get bad I usually call over beyond Riefe to Alex Zeffer but his
morale is so low he can rarely summon more than an agonizing oath. Then I have
to call on O'Grady for support because he works with military intelligence, such
as it is, and is the most terrorized of all by Holman. The five of us then discuss
solutions. Usually Holman is selected to save Uruguay — one plan is to send
Phipps over to the KGB Chief to request that they defect Holman, with our help
if they want it, but if they turn him down, as is likely, well, there's always
AVALANCHE.

Officers from the Inspector-General's staff were just here on a routine
inspection. This was the time to get the word back to headquarters about
Holman's incompetence, but I don't think anyone opened his mouth.

Montevideo 31 March 1965

The AVPEARL audio penetration of the PCU headquarters conference room
is another step closer. AVCAVE- 1 , again on guard duty, permanently installed the
two electrical sockets and final tests by Frank Sherno in the LP were successful.
Now the problem is to find a good LP-keeper who can monitor the installation

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and record the meetings. Ideally this person could also transcribe, but chances are
that transcribing will have to be done at first by AVENGEFUL-5, J transcriber of
the PCU telephone tap, who already knows the names and voices.

Montevideo 6 April 1965

The general strike today is very effective: Otero's office estimates that 90 per
cent of organized labour is participating. No government offices are open, there
are no taxis or buses, no restaurants, no newspapers. The theme is protest against
government economic policies and marches have been loud and impressive
although no violence is reported. Speakers have called for radical solutions to the
country's problems — solutions that will attack the privileged classes, where the
problems begin.

The strike is also being used to promote coming CNT programmes, including
the preparatory meeting for the Congress of the People that was postponed from
last December and the annual protest march of the sugar-cane workers from
Artigas in the far north to Montevideo. Recent statistics support the protests: the
OAS reported this month that inflation in Uruguay during 1962-4 was 59.7 per
cent — higher than Chile (36.6), Argentina (24.4) and even Brazil (58.4).

The government is getting uneasy about the CNT's successes of late. Adolfo
Tejera, the Minister of the Interior, made a radio speech last night on the rights
and duties of citizens in the context of today's general strike.

Holman keeps insisting that I develop more political contacts but I'm keeping
the activity to a minimum. Even if we reached a level of effectiveness in political
action similar to what we had in Ecuador, we would simply have better weapons
to use against the PCU, CNT and others of the extreme left. What's needed here
is intensification of land use, both for increasing export production and creating
more jobs, but this can never happen without land reform. If we were to have a
political-action programme to promote land reform, as well as action against the
extreme left, some justification might be found in the balance. But these
Uruguayan politicians are interested in other things than land reform.

Montevideo 14 April 1965

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The government has taken a first step towards suppressing agitation
organized by the extreme left. Last week the NCG designated an emergency
commission with special executive powers to deal with the drought, now some
months old, which is seriously endangering livestock. The commission includes
the Ministers of Defense and Interior and similar commissions have been
established in each department under the local police chief with representatives
of the Ministry of Defense, a regional agronomist and a veterinarian. The same
day the NCG also decreed special powers for the Minister of the Interior to limit
public gatherings to twenty-four hours. This second decree, which the Minister
later admitted, is to be used against the march of the sugar-cane workers, was
enacted in a manner designed to confuse it with the special drought measures and
with the hope that it might pass without much comment.

The CNT immediately denounced the measure as directed against the sugar-
workers' march, which prompted the Minister's admission; and the Colorado
minority NCG Councillors unsuccessfully tried to rescind it. Because these
decrees allow for restriction of civil liberties they were presented to the
Legislature for approval. The Blancos, however, knowing that the Colorados and
others would rescind the decree aimed at the marchers, have prevented a quorum
from being constituted each day by simply staying away.

In passing the decrees the NCG clarified that they were not adopting
emergency security measures as defined in the Constitution (equivalent to a state
of siege) and Tejera has given assurances that his special powers will be used
with reason. However, in a public statement two days ago he accused the
marchers of taking along women and children as hostages, of not having proper
health and educational facilities for children, and of allowing promiscuity
dangerous to collective morals. Clearly we have a confrontation building up,
aided by press reports coming from the Ministry of the Interior that the march
will be broken up before it reaches Montevideo. Right now the marchers are in
San Jose, only a few days away, where police are registering them by taking
biographical data, fingerprints and photographs for Otero's intelligence files. If
Tejera gives orders for the march to be broken up not too many people will notice
because this is tourism week and most of the country is on vacation. From our
viewpoint he ought to do just that because the sugar-cane workers are led by Raul
Sendic, now a fugitive and believed to be the organizer of most of the terrorist
bombings in the past year.

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Montevideo 25 April 1965

The march of the sugar-cane workers arrived in Montevideo yesterday —
almost unnoticed and with no danger of intervention by the government.
Something much bigger has suddenly attracted everyone's attention: one of
Uruguay's major banks has failed and been taken over by the Bank of the
Republic. The sensation is causing mild panic and fear that other banks may go
under, which might not be a bad thing. In this small country there are about fifty
private banks even though the government banks do about 65 per cent of
commercial business. The peso has slipped to 39.

Montevideo 27 April 1965

Inspector Piriz was assigned to handle investigations into fraud and other
crimes related to the bank failure. So far eleven of the officers and directors have
been jailed. Today, however, two more private banks were taken over by the
Bank of the Republic, and for fear of a run on banks in general a holiday was
decreed for all private banks. The holiday doesn't make much difference, though,
because all the private banks have been closed since the first failure six days ago,
when the unions struck to demand job security for employees of the bank that
failed. Almost unnoticed today was the NCG'S lifting of the emergency drought
decree of 8 April although the special decree on limiting public gatherings was
retained.

Montevideo 28 April 1965

I don't quite understand this invasion of the Dominican Republic. Bosch was
elected in 1 962 thanks to the peasant vote organized by Sacha Volman. J Volman
earlier set up the Institute of Political Education J in Costa Rica (cryptonym
ZREAGER) where we sent young liberal political hopefuls for training. Bosch is
from the same cut as Munoz Marin, Betancourt and Haya de la Torre. He stands
for the reforms that will allow for redistribution of income and integration.
Rightist opposition to his land reform and nationalistic economic policies brought
on his overthrow by the military in 1963 after only seven months in power. This

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was another chance for him to turn the balance towards marginalized peasants
and to channel income from industry, mostly sugar, into education and social
projects.

Now, just as the Constitutionalists have the upper hand to restore Bosch to
power, we send in the Marines to keep him out. Nobody's going to believe
Johnson's story of another Cuba-style revolution in the making. There has to be
more to the problem than this — for some reason people in Washington just don't
want Bosch back in. Uruguayans don't understand either. People here think
Bosch stands for the kind of liberal reform that brought social integration to
Uruguay. Already the street demonstrations against the US have started. Very
depressing. AVBUZZ-1 is going to look silly trying to place propaganda —
headquarters says we must justify the invasion because of a danger to American
and other foreigners' lives and a takeover of the Constitutionalist movement by
communists.

Montevideo 4 May 1965

Headquarters has sent about fifty operations officers to the Dominican
Republic to set up outposts in rural areas for reporting on popular support for the
Caamano forces. The officers were sent with communications assistants and
equipment for radioing reports straight back to the US. All WH stations were
notified to put certain officers on stand-by for immediate travel, but Holman is
not going to let me go — probably because he would have to work a little harder. I
would like to go and see for myself. Surely the Constitutionalist movement hadn't
fallen into the hands of the communists. And this Johnson Doctrine! 'Revolutions
that seek to create a communist government cease to be an internal matter and
require hemisphere action.' Bullshit. They just don't want Bosch back in and the
'they' is probably US sugar interests.

We've had more protest demonstrations against the invasion, some violent.
Targets of the attacks: US Embassy, OAS, US businesses. Today four
demonstrators were wounded by gunfire when police broke up a street march
following a meeting at the University. The private banks are still closed — fifteen
days now — and there's no telling when government employees' salaries for April
will begin being paid. Today both the Minister of Defense and the Minister of the
Interior publicly denied the rumours of an impending coup.

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Montevideo 7 May 1965

Ambassador Harriman came to explain the Dominican invasion and to
propose Uruguayan participation in the multilateral peacekeeping force He spoke
to President Beltran yesterday and afterwards held a press conference in which he
blamed those fifty-eight trained communists for having taken over the Bosch
movement, thereby creating the need for intervention. He admitted, though, that
Caamano, the leader of the Bosch movement, isn't one of the fifty-eight. Then he
said the US government is not going to permit the establishment of another
communist government in the hemisphere.

I can easily imagine the station in Santo Domingo in a panic compiling that
list of fifty-eight trained communists from their Subversive Control Watch List.
There were probably more than fifty-eight, but Caamano and the Bosch people
were in control, not trained communists. The movement was put down not
because it was communist but because it was nationalist. The Uruguayans weren't
convinced by Harriman — after he left, the NCG voted not to participate in the
peacekeeping force approved yesterday by the OAS. 'Fifty-eight trained
communists' is our new station password and the answer is 'Ten thousand
marines'.

Montevideo 12 May 1965

Protest', demonstrations and attacks against US businesses over the
Dominican invasion continue. The CNT, FEUU and other communist-influenced
organizations are most active in the demonstrations, but opposition to the
invasion is a popular issue going all the way up to the NCG. All America Cables
and IBM are among the businesses bombed.

The CNT is also leading protests against economic policies, and new
revelations of corruption in the banking sector are coming up almost daily.
Although the Congress passed a special law assuring jobs for the employees of
banks that have failed, tension continues, with three more banks taken over by
the Bank of the Republic yesterday. The bank workers' union voted to return to
work but today the government announced that the banks won't open until 17
May. The reason is that they can't open until a shipment of 500 million new pesos
arrives from London.

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Coup rumours continue and yesterday Tejera told the NCG that he believes
the 8 April decree limiting public gatherings is unconstitutional. He complained
that the only law relating to public meetings dates from 1897, but he promised
the NCG a new constitutional decree on the subject for next week. Port workers
struck yesterday and judicial branch employees began partial work stoppages for
payment of April salaries.

Montevideo 20 May 1965

Financial corruption in Uruguay seems to have no end. Yesterday the NCG
fired the entire board of directors of the Bank of the Republic. Nineteen officers
and directors of banks taken over have been imprisoned and investigations are
continuing. After being closed for twenty-six days the private banks have
reopened but the falling peso — it's down to 41 — suggests more scandal to come.

On the labour front, strike action for payment of April salaries has been
started by government employees in the judiciary, public schools, port, petroleum
monopoly, fishing enterprise, postal system, communications and University.
Other strikes are being planned or threatened.

Coup rumours are so strong that the Ministry of Defense yesterday issued a
denial. The latest rum ours relate to speculation in the Brazilian press that
Brazilian and Argentine military leaders are watching the increasing strikes and
banking scandals in Uruguay closely, and that perhaps Uruguay is becoming a
bad risk because of its opposition to intervention in the Dominican Republic and
its tolerance of exile activities. Meanwhile the NCG is considering Pio Correa's
latest protest on the exiles' meetings, finances and infiltration from Uruguay back
to Brazil.

The PCU has in recent months been planning to host an international pro-
Cuba conference to be called The Continental Congress of Solidarity with Cuba
— now scheduled for 18-20 June. Headquarters is anxious to prevent the
conference so Holman proposed to Tejera that it be prohibited because it might
reflect badly on Uruguay in the US (where emergency loans are going to be
sought for financial relief), and in Latin America. Tejera immediately saw the
connection with Brazilian problems, and promised to take up the matter with the
NCG.

Montevideo 29 May 1965

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Suddenly we've had a flurry of security moves sparked by controversy over
the activities of one of O'Grady's people, Juan Carlos Quagliotti, J and others of
his group. Last night extraordinary police control was established in Montevideo
and the interior departments, with special patrols, check points and security
guards at radio stations, the telephone company, waterworks, railroad stations,
bridges and crossroads. This morning Tejera said publicly that these measures
were taken to help the electric company promote voluntary rationing of power,
because of low generating capacity as a result of the drought last summer. The
Minister of Defense also denied any special reasons for the police measures, but
rumours are stronger than ever of a military move against the government.

According to Commissioner Otero of police intelligence, what really
happened is that Quagliotti was arrested after Otero's investigation revealed that
he had arranged for the printing and distribution of a distorted version of an
article written in 1919 by President Beltran's father, on justification of military
intervention in politics. The judge who heard the case refused to take jurisdiction,
however, and Quagliotti was released pending action by military courts.
Quagliotti's release caused a wave of ill-feeling in the police, while resentment
also broke out in certain military circles against the police for having made the
investigation and arrest.

So far the Quagliotti case hasn't been connected with the special security
measures and for the time being O'Grady is going to avoid meeting him.
Similarly when Otero asked me several days ago what I knew about Quagliotti I
said nothing. Headquarters is very concerned that a breach is opening up between
police and military leaders, but we've reported that the storm will probably pass.
According to the Chief of Police, Colonel Ventura Rodriguez, the crisis is being
resolved.

At an NCG meeting yesterday before imposition of the special security
measures, Tejera asked for permission to ban the Continental Congress of
Solidarity with Cuba. Using a report we had prepared on the Congress as his
own, the Minister said the purpose of the Congress was to raise the question of
relations with Cuba once more and to promote foreign ideologies that are
incompatible with Uruguayan institutions. He said he wishes to avoid the
pernicious proselytism by trained communist elements who promote infiltration
by dangerous extremists, adding that Uruguay already has enough problems
without this Congress. The NCG postponed a decision but chances are good that
they'll prohibit the Congress in order to avoid jeopardizing their already difficult

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prospects for refinancing the Bank of the Republic, which is bankrupt, owing
some 18 million dollars to New York banks. The President of the Bank has
resigned, and the bank has been taken over by the NCG. The peso is now down
to 52, and the scandals are moving into wool-exporting companies.

Montevideo 2 June 1965

Last night the NCG discussed the Quagliotti case with speeches from Tejera
and the Minister of Defense. Tejera admitted that the special security measures of
last week — which are still in force — were a result of Quagliotti's agitation in
military circles and of dissention over whether he will be prosecuted or not.
Today Quagliotti appeared before a military court which refused to take
jurisdiction because he hadn't actually entered any military installation. It seems
the crisis has passed for the time being thanks to Quagliotti's friends among the
senior military officers, but resentment continues in the police over the failure to
prosecute in both civil and military courts.

Tejera's request to the NCG to ban the pro-Cuban Congress went through.
They voted to prohibit it on the principle of nonintervention. Headquarters will
be pleased.

Montevideo 4 June 1965

Only a few more weeks until Holman is transferred. What none of us can
imagine is why he is going to Guatemala, where one of the most serious
insurgency threats exists. Surely if he is bad enough to be transferred from
Montevideo after only two years, he's bad enough not to be sent as Chief of
Station where armed action is under way.

About the only success he can claim is getting the Public Safety programme
going. After the first AID officers arrived, Holman gave a couple of dinners to
introduce them to the Minister of the Interior and senior police officers. As the
station officer in charge of police liaison I had to go to Holman's house for these
dinners, and soon he'll be giving more parties to introduce the new Chief of
Station and say farewell. Strange man this Holman. Surely he can sense his
isolation at the station but he never mentions it. He just keeps on denigrating the
other officers.

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Holman has asked me to take over another operation. This one is an an effort,
not yet off the ground, to make a technical installation against the Embassy of the
United Arab Republic on the street behind our Embassy and 'on the floor above
the AI D offices. Phipps had been handling this operation without enthusiasm,
but headquarters is getting anxious because if successful it will enable an
important UAR cryptographic circuit to be read. As part of planning they asked
for a floor plan of the Embassy, which I got through the AVENIN electric
company agent, and soon a Division D officer will be coming to survey the place.
As my office is in the back of our Embassy I can almost look out into the
windows of the UAR Embassy.

I still can't believe the reasons for the Dominican invasion that we're trying to
promote through AVBUZZ-1. Holman says it all goes back to the Agency's
assassination of Trujillo. He was Chief of the Caribbean branch in headquarters
at the time and was deeply involved in planning the assassination, which was
done by Cuban exiles from Miami using weapons we sent through the
diplomatic, pouch. The weapons were passed to the assassins through a US
citizen who was an agent of the Santo Domingo station and owner of a
supermarket. He had to be evacuated though, after the assassination, because the
investigation brought him under suspicion.

Why is it that the invasion seems so unjustifiable to me? It can't be that I'm
against intervention as such, because everything I do is in one way or another
intervention in the affairs of other countries. Partly, I suppose, it's the immense
scale of this invasion that shocks. Ob the other hand, full-scale military invasion
is the logical final step when all the other tools of counter-insurgency fail. The
Santo Domingo station just didn't or couldn't keep the lid on. But what's really
disturbing is that we've intervened on the wrong side. I just don't believe 'fifty-
eight trained communists' can take over a movement of thousands that includes
experienced political leaders. That's a pretext. The real reason must be opposition
to Bosch by US business with investments in the Dominican Republic. Surely
these investments could have produced even while the land reform and other
programmes moved ahead.

Montevideo 17 June 1965

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We almost just lost one of our principal police liaison officers, Carlos Martin,
f the Deputy Chief of the Montevideo Police. Martin is an Army colonel, as is
the Chief, but he is also a chartered accountant and has been supervising the
police investigations that have uncovered so much corruption since April. He
resigned two days ago because a judge denied his request to interrogate one of
the convicted officers of the first bank to fail about lists of payments to high
government officials by that bank. The lists are purposely cryptic notes that
Martin wants clarified to aid the investigation. Martin's resignation in protest
against political suppression of the investigations provoked such a row that the N
CG agreed to take up the matter of the lists, and today Martin withdrew his
resignation. So far there have been thirty-one convictions.

Montevideo 24 June 1965

The NCG now has the lists of political bribes paid by the first bank that
failed in April. Names include an important Blanco Senator, the Vice-President of
the State Mortgage Bank, a Blanco leader who has just been nominated as
Uruguay's new Ambassador to the UN, two high officers of the Ministry of the
Treasury, the person in charge of investigating one of the banks that failed, and a
person known only by the initials J.J.G. This last person can only be Juan Jose
Gari, our Ruralista political contact from the Nardone days and now the President
of the State Mortgage Bank.

Meanwhile the Bank of the Republic debt has been determined at 358 million
dollars, with 38 million dollars currently due. Gold from the Bank of the
Republic, perhaps as much as half the Bank's holdings will have to be sent to the
US as collateral for refinancing. Such an emotional and humiliating requirement
is sure to cost the Blancos heavily.

In an important policy decision on the labour front, the Blancos decided to
apply sanctions against the central administration employees for a strike on 17
June. Justification for the sanctions is that strikes by government employees are
illegal, although until now the government had been reluctant to invoke illegality
because of inflation and the obvious political consequences. The decision was
answered by another strike of central administration employees — this one began
yesterday and will end tonight. The issues again are employees' benefits, agreed
upon last year but still unpaid, payment of salaries on, time, and now the

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sanctions. The strike is complete, with even the .Montevideo airport and the
government communications system closed. Other strikes continue in the
judiciary, University and the huge Clinics Hospital. The peso is down to 69 and
one of the Colorado Councillors has called for the resignation of the Minister of
the Treasury.

Montevideo 7 July 1965

The Movement of the Revolutionary Left (MIR) in Peru has finally gone into
action and seems to have had several initial successes against Peruvian police.
Three days ago the Peruvian government declared a state of siege and the
military services have been called in to supplement police operations. Hundreds
of leftists are being arrested all over the country but the guerrilla operation seems